What Are the Different Chapters of Bankruptcy?
- Chapter 7, available to individuals and corporations, is a complete discharge of debt. If an individual meets Chapter 7's strict eligibility requirements, his debts will be completely eliminated.
- Chapter 13 allows individuals to reorganize their debt in an attempt to pay it down. A court-ordered payment plan is established, and the individual will work toward paying off the debt over time.
- Chapter 11 is typically filed by businesses wanting to remain in business while paying down debt under a court-ordered payment plan.
- Chapter 9 operates just like Chapter 11, except it is available exclusively to municipalities. Under Chapter 9, municipalities can be cities, towns, villages, counties, taxing districts, municipal utilities and school districts.
- Chapter 12 operates in a manner similar to Chapter 13, but it is available exclusively to farmers and fishers. Chapter 12 allows a professional farmer or fisher to continue their business while paying the debt.
- Chapter 15 allows the courts to get involved in bankruptcy proceedings involving more than one country. Typically, it is attached to a bankruptcy claim by a debtor in a foreign country.