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Chapter 7

This form of personal bankruptcy, also referred to as “straight” bankruptcy or “liquidation,” eliminates all dischargeable debts in exchange for certain property which is sold so the proceeds can be distributed to your creditors. It's generally utilized by people who are unable to afford the minimum payments on their credit cards, and do not have extensive assets which require protection.

You may be allowed to keep some types of property, such as your home or car, depending your state's exemption rules. Chapter 7 does not eliminate the rights of mortgage holders or car loan creditors to take possession of your property in order to cover your debts.

The paperwork can often be completed in one day, provided that all of the necessary documentation is at hand. Once a case has been filed, it can take approximately four months for you to receive an official discharge notice.

Chapter 13

Often referred to as “debt reorganization,” this gives you an opportunity to propose a plan for paying off your debts over a period of three to five years. It also allows you to keep certain types of property, such as your house and your car.

It's for people who require debt relief, but do not wish to forfeit specific key assets. In many cases, those whose income is too high for a Chapter 7 proceeding choose this option.

Chapter 11

This type of bankruptcy is for individuals and businesses – such as retailers, restaurants, manufacturers, or corporations – which are in debt.

If your business is behind on payments to vendors, having difficulty fulfilling its financial obligations with regard to its rent/lease, or in arrears for sales, income, or property taxes, then this may be the best solution for you to pursue.

You will be able to submit a plan for reorganization, and if that plan is approved, you will be in a position to repay your existing debts to creditors over an extended period of time. It can cease collection actions and lawsuits, release you from certain leases, and allow you to sell assets free and clear of liens.

Chapter 12

This is a relatively new form of bankruptcy which allows family farmers and family fishermen who have regular annual incomes to continue farming/fishing while restructuring their debts under court protection.

Its purpose is to eliminate many of the barriers under Chapter 11 bankruptcy, and to reduce the time and expense involved in obtaining approval for a reorganization plan.

Filing a petition under Chapter 12 automatically stays most collection actions. As long as this is in effect, creditors are prohibited from filing/continuing foreclosures, state court lawsuits, or repossessions.

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