Bankruptcy is a process through which individuals or businesses can get relief from their debts by having their assets liquidated to pay off creditors. In the United States, there are two types of bankruptcies that individuals can file: Chapter 7 and Chapter 13.
Chapter 7 bankruptcy involve the liquidation of assets in order to pay off creditors. Once the debts have been paid off, the debtor is discharged from his or her obligations.
Chapter 13 bankruptcy, on the other hand, allows individuals to restructure their debt so that it can be repaid over a period of time. The repayment plan is put in place for three to five years, and at the end of that period, any remaining debt is discharged.