Choosing which chapter of bankruptcy is best for
you depends on what kind of debts you have, whether you are
behind on secured debts, and whether you have the regular income
necessary for Chapter 13.
is a repayment plan for individuals with regular income and
unsecured debt less than $307,675 and secured debt less than
The debtor keeps his property and makes
regular payments to the Chapter 13 trustee out of future income
to pay creditors over time (3-5 years).
Repayment in Chapter 13 can range from 10% to
100% depending on the debtor's income, his assets, and the make
up of the debt.
Certain debts that cannot be discharged in
Chapter 7 can be discharged in Chapter 13.
Chapter 13 also provides a mechanism for individuals to prevent
foreclosures and repossessions, while catching up on their
is the most common form of bankruptcy. It is a liquidation
proceeding in which the debtor's non-exempt assets, if any,
are sold by the Chapter 7 trustee and the proceeds distributed
to creditors according to the priorities among creditors
established in the Code.
Chapter 7 is available to individuals,
married couples, corporations and partnerships. Individual
debtors get a discharge within 4-6 months of filing the case.
If there are assets which are not exempt, the
trustee takes control of those assets, sells them and pays
creditors as much as the proceeds permit.
Any wages the debtor earns after the case is
begun are the debtor's; the creditors have no claim on those
is a reorganization proceeding, typically for corporations or
partnerships. Individuals, especially those whose debts exceed
the limits of Chapter 13, may file Chapter 11.
In Chapter 11, the debtor usually remains in
possession of his assets and continues to operate any business,
subject to the oversight of the court and the creditors
The debtor proposes a plan of reorganization
which, upon acceptance by a majority of the creditors, is
confirmed by the court and binds both the debtor and the
creditors to its terms of repayment. Plans can call for
repayment out of future profits, sales of some or all of the
assets, or a merger or recapitalization.