- Debtors must qualify for a Chapter 7 bankruptcy based on their income and resources. A Chapter 7 bankruptcy allows you to discharge, or wipe out, most of your debt and start out fresh again. A Chapter 7 bankruptcy doesn't discharge certain debts such as student loans, child support and alimony.
- A Chapter 13 bankruptcy allows debtors who have the ability to pay some of their debts to pay debts in manageable monthly payments over a period of three to five years. A Chapter 13 bankruptcy stops garnishments, vehicle repossessions and foreclosure proceedings. At the end of the repayment period, any remaining debts are discharged, except for ineligible debts such as alimony, child support and student loans.
- Bankruptcy courts use the means test to determine whether you're eligible to file a Chapter 7 bankruptcy or whether you have sufficient disposable income to pay a portion of debts through the Chapter 13 monthly debt payment. It may be possible for one spouse to qualify for a Chapter 7 bankruptcy if he has enough debts to offset both his and his spouse's income. Then the other spouse who has fewer debts may be able to file for Chapter 13 to repay her debts over a period of time and also stop foreclosure proceedings and repossessions.
- If you and your spouse have joint debts, you may still be responsible for paying the debts if your spouse files a Chapter 7 bankruptcy alone. If most of your debts are joint debts, it may be advisable to file a joint bankruptcy. A lawyer should be consulted before making a final decision.