There are two different types of bankruptcy most consumers can file, chapter 7 bankruptcy which wipes out most debts by liquidating your assets to pay off creditors, and chapter 13 bankruptcy, which allows you to create a payment plan to pay off a portion or all of your debts over a period of up to 5 years.

In a ch 7 bankruptcy you can wipe out most unsecured debts, meaning debts that are not attached to any property such as unsecured credit cards, medical bills, and personal loans. Most secured debts can also be wiped out by giving the property back to the debt company, such as handing in your car, home or furniture that is secured to the debt.

There are some debts that you can not eliminate in bankruptcy, and these are called priority debts. Priority debts can include back taxes you owe, child support, employment compensation you owe to others, and claims made against you for death or injury that occurred while you were intoxicated. You are also usually not able to eliminate student loans when you file bankruptcy unless you can prove hardship.

Filing bankruptcy can eliminate most debts, but it’s important to understand what property you risk losing when you file a chapter 7. If you are unsure of the bankruptcy exemptions in your state or whether filing will eliminate your debts, be sure to get a free bankruptcy review and find out how bankruptcy will impact your personal situation.