Types of Bankruptcy
Types of Bankruptcy
There are four types of bankruptcy in the United States, and they are named by their corresponding Chapters in the United States Code. Chapter 7 and Chapter 13 address most personal bankruptcies. The type of bankruptcy filing depends on several factors.
Chapter 7 Personal Bankruptcy
A Chapter 7 Bankruptcy is often called a "liquidation bankruptcy." A bankruptcy trustee is appointed to sell all non-exempt assets of the debtor and pay all creditors any proceeds. Any income after the bankruptcy filing may be kept by the debtor. Much property is exempt. Often the debtor's home, car, and household property are exempt.
Chapter 13 Personal Bankruptcy
In a Chapter 13 Bankruptcy the debtor with a regular source of income submits a debt reorganization and repayment plan. If approved by the trustee, the creditors must accept it. In a Chapter 13 bankruptcy, the debtor usually keeps his/her assets. A Chapter 13 Bankruptcy is sometimes called a Wage Earner Bankruptcy.
Other Bankruptcies
- Chapter 9 bankruptcy is a municipal bankruptcy and is a federal mechanism for the resolution of a city, county, or other municipality's debts.
- Chapter 11 bankruptcy is a rehabilitation or reorganization of debts by businesses and some individuals with substantial debts and assets. This is sometimes called a corporate bankruptcy and is is a form of corporate financial reorganization which typically allows companies to continue to function while they follow debt repayment plans.
- Chapter 12 bankruptcy is a special bankruptcy for family farmers and fishermen.
- Chapter 15 bankruptcy is used by non-US entities to seek help dealing with debts.
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