WHAT ARE THE DIFFERENT BANKRUPTCY CHAPTERS?

Individuals file bankruptcy under one of four chapters of the Bankruptcy Code:

Chapter 7 is a liquidation bankruptcy for debtors without sufficient income or resources to pay their debts. Assets not protected are liquidated and the proceeds are paid to unsecured creditors. The debtor receives a discharge of debts, subject to certain exceptions.

Chapter 13 is an arrangement to pay disposable income, over a period of 3 to 5 years, for the benefit of creditors. Upon completion of the Chapter 13 Plan the debtor receives a discharge of the remaining balance of debts, subject to certain exceptions.

Chapter 12 is designed to permit family farmers and fishermen to repay their debts over a period of time from future earnings and is similar to chapter 13.

Chapter 11, designed for the reorganization of a business, is also available to consumer debtors who have too much income for chapter 7, and too much debt for chapter 13.