The bankruptcy laws are contained in Title 11 of the U.S. Code.  There are several options for filing bankruptcy.  Out of the types of bankruptcy, the most common are Chapters 7 and 13.

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The other Chapters are for specific entities.
  • Chapter 7 bankruptcy is for individuals, but businesses may also file under Chapter 7. Chapter 7 wipes out most debt. Generally, all of the assets are sold and the money is used to pay off the creditors.
  • Chapter 13 bankruptcy is generally for individuals. Chapter 13 allows the debtor to keep certain parts of his or her estate (such as one house and one vehicle) and is a re-organization of debt. The trustee assigned to the case reviews the debtor's financial affidavit and sets up a payment plan. The debtor pays the payments to the bankruptcy court. The court then pays the creditors a portion of what they are owed.
  • Chapter 11 bankruptcy is generally used for businesses that want to reorganize. Chapter 11 allows a company to keep its doors open so it can continue to do business.
  • Chapter 9 bankruptcy is used for the adjustment of debts of a municipality. Individual debtors do not file under Chapter 9.
  • Chapter 12 bankruptcy is used for the adjustment of debts of a family farmer or fisherman with a regular annual income.
  • Chapter 15 bankruptcy is used for ancillary and cross-border bankruptcies.

The free Bankruptcy Worksheet is a good place to start for anyone considering the legal issues surrounding personal or business bankruptcy. You can also find a bankruptcy lawyer today to help you with credit and bankruptcy legal information, including the types of bankruptcy that will be the best fit for your situation.

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Get started Ask a Lawyer a Question You'll hear back in one business day.