Chapter 7 is called “liquidation” bankruptcy because filers may lose some of their property, with some important exceptions. Chapter 7 is reserved for individuals and businesses with little or no ability to repay debts in the future. So those who file Chapter 7 may lose non-exempt assets in exchange for having most debts erased.
Chapter 13 is called “reorganization” bankruptcy because it allows consumers to reorganize their debt burdens and payment schedules. Anyone filing for Chapter 13 must also propose a repayment plan showing your income and how you will pay off your debts. Working with the court, your plan will determine how much you need to repay, based on your income, debt load, and the value of your property.