What Different Types of Bankruptcy Should I Consider?
There are four types of bankruptcy cases provided under the law:
- Chapter 7 is known as a liquidation of debts. It requires a debtor to give up property which exceeds certain limits called “exemptions”, so the property can be sold to pay creditors. Depending on the value and type of property the Debtor often does not have to surrender it.
- Chapter 11, known as “reorganization”, is used by businesses and a few individual debtors whose debts are very large.
Chapter 12 is reserved for family farmers.
Chapter 13 is a debt repayment plan. It requires a debtor to file a plan to pay debts (or parts of debts) from current income, usually lasting 3-5 years.
Most people filing bankruptcy will want to file under either chapter 7 or chapter 13. Either type of case may be filed individually or by a married couple filing jointly.