In Chapter 7 bankruptcy proceedings, a person usually lists the specific items of property that they wish to exempt. All of their other property is then liquidated or sold to pay off their debts. Although Chapter 7 bankruptcies are relatively simple, they are reported on a person’s credit report for the next 10 years.
By contrast, in a Chapter 13 bankruptcy, an individual must reorganize their property and submit a plan to pay off their debts in 3-5 years. To qualify for a Chapter 13 bankruptcy, an individual must generally have sufficient disposable income to fund a repayment plan. However, a Chapter 13 bankruptcy only remains on a person’s credit report for a maximum of 7 years.