Bankruptcy Chapters

Chapter 7

Informally called "straight bankruptcy," Chapter 7 is a liquidation bankruptcy proceeding. The debtor turns over all non-exempt property (assets) to the bankruptcy trustee who then converts it to cash for distribution among the creditors. At the end of the proceeding the debtor receives a discharge of indebtedness (discharge notice) for all dischargeable debts, releasing him or her from personal liability for those debts.

Chapter 11

Also known as "reorganization," Chapter 11 is normally the chapter under which corporations or their lawyers file. This allows the business to continue its operations while repaying creditors concurrently through a court-approved plan of reorganization.

Chapter 13

Also known as "Adjustment of Debts of an Individual with Regular Annual Income," Chapter 13 provides debt relief for individuals or consumers. Chapter 13 differs from Chapter 7 in the respect that it enables the debtor to keep valuable assets, like a house, while making payments to creditors (through the trustee) based upon the debtor's anticipated income over the life of the plan (usually three to five years). At a confirmation hearing, the court either approves or disapproves the plan, depending on whether the plan meets the Bankruptcy Code's requirements for confirmation.

Should I Hire a Bankruptcy Lawyer?

If you are a consumer or business facing foreclosure, lawsuits, liens, repossession or wage garnishment, an experienced bankruptcy attorney can help you find the best legal option to eliminate your debt.

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