If someone is having difficulty paying off debt and is receiving harassing calls from creditors, bankruptcy may be an option to start fresh.

People may qualify to file for either Chapter 7 or Chapter 13 bankruptcy, depending on their circumstances.

Chapter 7

According to FindLaw, Chapter 7 wipes out almost all of a consumer’s debt, but the debtor must meet certain guidelines. One requirement is that the majority of the person’s debt must fall in the dischargeable category. Examples of this type of debt include medical bills, credit card debt and personal loans.

Qualified debtors must also prove they are unable to repay the debts on a restructured payment plan. If applicants meet the guidelines, it is a fairly quick process for the court to issue debt discharge after selling off the debtor’s nonexempt property, and then the person is no longer liable for the debts.

Chapter 13

If someone does not qualify for Chapter 7 bankruptcy or wants to keep some property, Chapter 13 allows for a repayment of the debts over the course of three to five years. The debtor must be able to prove the ability to pay creditors back over this time.

Some examples of debt that falls in the Chapter 13 category include vehicle loans, court fees, home association fees, tax-related debts, marital settlements and mortgages.

According to SFGate, Chapter 13 bankruptcy may be able to save a house that is going through the foreclosure process. The bankruptcy puts a stop to foreclosure proceedings and allows the owners to stay in the home. If there is an unsecured debt related to the house, the creditors may negotiate the loan’s terms to make it easier for the debtors to pay the debt. However, the court cannot order a reduced balance or reschedule a secured mortgage loan, and the owners must resume normal and on-time payments or risk losing the house.