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Types of Bankruptcy Options


  1. Chapter 7  – This is the most common form of bankruptcy for individuals. It is a liquidation proceeding in which the debtor’s non-exempt assets are sold by the Chapter 7 trustee and the proceeds are distributed to the creditors according to the priorities among creditors established in the Bankruptcy Code.
  2. Chapter 11 – This is a reorganization proceeding, typically for corporations or partnerships. In a Chapter 11 bankruptcy filing, the debtor usually stays in possession of the assets and continues to operate their business being subject to the oversight of the bankruptcy court. The debtor proposes a reorganization plan, which upon acceptance by a majority of the creditors, is confirmed by the bankruptcy court and binds the debtor and the creditors to its terms of repayment. Plans can call for repayment out of future profits, sales of some or all of the assets, or a merger or recapitalization.
  3. Chapter 12 – A Chapter 12 bankruptcy filing is typically one in a rural county and usually offers additional benefits to farmers and fisherman in certain circumstances beyond that of ordinary wage earners.  Chapter 12 is applicable only to family farmers and fishermen. These are difficult bankruptcies to file, only because of their size. The reorganization plan is usually large and the Chapter 12 Trustee will supervise the debtor’s progress. Due to the substantial amount of secured debt in a Chapter 12 bankruptcy the assets are not always liquid.
  4. Chapter 13 – This is a repayment plan for individuals based on a certain level of regular income, unsecured debt and secured debt. The debtor keeps their property and makes regular payments to a Chapter 13 trustee, who oversees the implementation of the repayment plan.

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