There are 4 types of bankruptcy

Chapter 7
(referred to as straight bankruptcy)
Chapter 13
(referred to as a repayment plan)
Chapter 11
(reorganization used by wealthy persons and corporations)
Chapter 12
(intended for family farmers and fishermen)

Almost all people in El Paso who file bankruptcy file under Chapter 7 or Chapter 13.

A brief explanation of each is as follows:

Chapter 7 Bankruptcy

An orderly, court-supervised procedure by which a designated official known as a Trustee collects all of the persons non-exempt property, reduces it to cash, and distributes it to creditors as required by law.

The key point here is that only non-exempt property is collected and sold to pay off creditors. Only rarely will there be non-exempt property in a Chapter 7 case. As such, most people keep all of their property! People who file Chapter 7 Bankruptcy typically receive discharge within just a few months of filing for bankruptcy.

At that time, the person is released from any further obligation to pay all dischargeable debts. Amazingly, it is not unusual for people to eliminate literally tens of thousands of dollars or more in medical debt, credit card debt, payday loans, court judgments, debt from a failed business, personal guarantees, even certain federal income taxes over 3 years old, etc.

Important in a Chapter 7 Bankruptcy is that you will need to be current on and continue making required payments on any loan you used to purchase your home or vehicle or the like (secured loans). If not, the creditor may be able to take back the property unless you instead file a Chapter 13 Bankruptcy and repay the delinquent amounts over time.

Also, Chapter 7 may not be available for persons who have a large amount of income remaining after paying for their living expenses and payments on loans used to purchase their home or car, etc. For a more thorough explanation of Chapter 7 Bankruptcy in comparison to Chapter 13 Bankruptcy, click on Chapter 7 vs. Chapter 13

Chapter 13 Bankruptcy

Designed for individuals with a regular source of income. Chapter 13 enables a person to pay back debt without being required to sell off non-exempt assets as is required under Chapter 7 (although you can selectively surrender certain property which you owe more than it is worth or just simply dont want).

Instead, some or all of ones debts are paid out of future income, after accounting for living expenses, over 3 or 5 years, based on a court approved repayment plan. The plan will not require that a person pay all of their unsecured debt over that time unless they have enough income to do so after subtracting living expenses and payments on debt secured by property they decide to keep.

In fact, some Chapter 13 plans dont provide much money, if any, to unsecured creditors such as judgment creditors, credit card companies, medical bill collectors, etc. It is not uncommon for a person to permanently eliminate literally tens of thousands of dollars of debt.

Many people find Chapter 13 Bankruptcy preferable based on their situation. For a more thorough explanation of Chapter 13 Bankruptcy in comparison to Chapter 7 Bankruptcy, click on Chapter 7 vs. Chapter 13.