Chapter 7 is the most prevalent personal bankruptcy. It includes no repayment plan. Chapter 13 bankruptcy, also known as the "wage earner's plan," allows people with regular income to develop a plan to repay all or part of their debts.
"If you don't have a source of income, you will not qualify to file Chapter 13," Erickson said. "If you are unemployed but can make mortgage and car payments, you can file Chapter 7."
While you can keep your house in Chapter 7, unsecured debt such as credit card debt will be discharged, he said. But debt acquired within 90 days of filing may be excluded — an assurance that you won't go on a shopping spree, which was common under prior bankruptcy laws.
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