Bankruptcy

Types of bankruptcyThe U.S. Bankruptcy Code is divided into different chapters, each with specific eligibility requirements for debtors.For individuals

Chapter 7: Liquidation. This is the most common form of consumer bankruptcy, designed for debtors with lower incomes who do not have the ability to repay their debts. A court-appointed trustee sells the debtor's non-exempt assets, if any, to pay creditors. At the end of the process, most unsecured debts are discharged.
Chapter 13: Reorganization. This is for individuals with a steady income who can repay at least some of their debt over time. The debtor proposes a 3–5-year repayment plan to the court. Chapter 13 can help protect assets like a home from foreclosure and discharges most unsecured debt once the plan is completed.

For businesses

Chapter 11: Reorganization. This chapter allows corporations and partnerships to reorganize their business and repay creditors over time while continuing operations.
Chapter 7: Liquidation. A failing business may file under Chapter 7 to liquidate its assets and formally close down.

Other types

Chapter 9: Reorganization for municipalities.
Chapter 12: Reorganization for family farmers and fishermen.
Chapter 15: AppliesThe U.S. Bankruptcy Code is divided into different chapters, each with specific eligibility requirements for debtors.