When personal liabilities far exceed current income and assets, federal bankruptcy protection provides an **automatic stay** halting all lawsuits, garnishments, and collection actions, culminating in a legal discharge of qualifying unsecured debts.
1. Bankruptcy Chapters Compared
| Feature | Chapter 7 (Liquidation) | Chapter 13 (Wage Earner Plan) |
|---|---|---|
| Primary Eligibility | Income below state median via Means Test | Regular income with unsecured debt < $2.75M |
| Typical Duration | 90 – 120 Days to Discharge | 36 – 60 Months Court-Supervised Plan |
| Asset Retention | Non-exempt assets liquidated (most keep all) | Keep all assets while curing arrears |
| Credit Report Retention | 10 Years from Filing Date | 7 Years from Filing Date |