Wednesday, April 16th, 2014


There are six types of bankruptcy under the Bankruptcy Code, located at Title 11 of the United States Code.

We will primarily be concerned with Chapter 7 Bankruptcy, Chapter 11 Bankruptcy and Chapter 13 Bankruptcy.

Chapter 7 Bankruptcy:  provides for basic liquidation for individuals and businesses; also known as straight bankruptcy; it is the simplest and quickest form of bankruptcy available

Chapter 9 Bankruptcy: provides for municipal bankruptcy; a federal mechanism for the resolution of municipal debts

Chapter 11 Bankruptcy: provides for rehabilitation or reorganization and is used primarily by business debtors, but sometimes by individuals with substantial debts and assets; known as corporate bankruptcy, it is a form of corporate financial reorganization which typically allows companies to continue to function while they follow debt repayment plans

Chapter 12: provides for rehabilitation for family farmers and fishermen;

Chapter 13 Bankruptcy: provides for rehabilitation with a payment plan for individuals with a regular source of income; enables individuals with regular income to develop a plan to repay all or part of their debts; also known as Wage Earner Bankruptcy

Chapter 15 Bankruptcy: provides for ancillary and other international cases; provides a mechanism for dealing with bankruptcy debtors and helps foreign debtors to clear debts.

The most common types of personal bankruptcy for individuals are Chapter 7 and Chapter 13. As much as 65% of all U.S. consumer bankruptcy filings are Chapter 7 cases. Corporations and other business forms file under Chapters 11.

Chapter 7 and Chapter 13 are the bankruptcy chapters often used by most individuals. The chapters which almost always apply to consumer debtors are Chapter 7, known as a “straight bankruptcy”, and Chapter 13, which involves an affordable plan of repayment. An important feature applicable to all types of bankruptcy filings is the automatic stay. The automatic stay means that the mere request for bankruptcy protection automatically stops and brings to a grinding halt most lawsuits, repossessions, foreclosures, evictions, garnishments, attachments, utility shut-offs, and debt collection activity.