Types of Bankruptcies

Our firm generally only handles chapter 7, 11, and 13 cases with an emphasis on consumer and small business Chapter 7 and Chapter 13.  Chapter 11 is typically costly and can sometimes do more harm than good unless you have a mid size to large business.

The “Seven” Chapters of Bankruptcy

Technically there are only six official chapters of bankruptcy for petition purposes.  However, the “seventh” chapter represents a combination of chapter 7 and chapter 13 and is unofficially known as a chapter 20.  Read below for the differences in the chapters.

Common Chapters of Bankruptcy: Chapters 7, 11, 13, and “20”

Chapter 7: This is considered a liquidation bankruptcy.  In general, you have a long list of exemptions of assets that you will get to keep and you will discharge other debts unless they are deemed to be non-dischargeable.  Unlike a ch 11 or 13, there is no payment plan that you owe.  This is a one time filing that takes about six months to complete.

Chapter 11: This is a repayment plan for business and individuals with more than 1.1 million in secured assets and/or 360k in unsecured assets.  Chapter 11’s length can vary but focus on repayment over the relevant period.

Chapter 13: This is a repayment plan for individuals with less than 1.1 million in secured assets and or less than $360k in secured assets.  Chapter 13’s are generally a three to five year repayment plan.

Chapter “20”: This is a combination of a chapter 7 followed by a chapter 13, hence chapter “20”.

Uncommon Chapters of Bankruptcy: Chapters 9, 12, and 15

Chapter 9: This chapter is for municipalities.  This includes cities, towns, counties, school districts, and other similar entities.

Chapter 12: This chapter is for “family” farmers and fishermen.  This is a repayment style bankruptcy like a chapter 11 or chapter 13 with  three to five year repayment period.

Chapter 15: This chapter is for individuals and businesses where there are assets in multiple countries and require cooperation between a US Bankruptcy Court and a foreign Court or Courts.  Accordingly, this is only used if there are significant assets in two or more countries.