There are four types of bankruptcy cases provided under the law:
- Chapter 7 is known as “straight†bankruptcy or “liquidation.â€Â It requires an individual to give up property which is not “exempt†under the law, so the property can be sold to pay creditors. Generally, those who file chapter 7 keep all of their property except property which is very valuable or which is subject to a lien which they can not avoid or afford to pay.
- Chapter 11, known as “reorganization,†is used by businesses and a few individuals whose debts are very large.
- Chapter 12 is reserved for family farmers and fishermen.
- Chapter 13 is a type of “reorganization†used by individuals to pay all or a portion of their debts over a period of years using their current income.
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.
Source: Answers to Common Bankruptcy Questions Pamphlet
National Consumer Law Center, Boston, MA
www.nclc.org
Remember: The law often changes. Each case is different. This pamphlet is meant to give you general information and not to give you specific legal advice.
