For the most part, bankruptcy falls into one of two types—liquidation or reorganization. Chapter 7 bankruptcy. In exchange for wiping out qualifying debt, you must agree that the trustee can take and liquidate (sell) some of property to pay back debt. However, you can keep (exempt) property protected under state law. Chapter 13 bankruptcy. Chapter 13 bankruptcy reorganizes debt for high-income earning individuals (although it is available to others, too). Although you can keep all of your property, you must pay creditors the value of any nonexempt assets as part of a three- to five-year Chapter 13 bankruptcy payment plan as well as any additional discretionary income (as determined by the bankruptcy rules).