Types of Bankruptcy Cases

There are four types of bankruptcy cases provided under the law:

1. Chapter 7 is known as “straight” bankruptcy or “liquidation.”  It requires a debtor to give up property which exceeds certain limits called “exemptions,” so the property can be sold to pay creditors.
2. Chapter 11, known as “reorganization,” is used by businesses and a few individual debtors whose debts are very large.
3. Chapter 12 is reserved for family farmers.
4. Chapter 13 is called “debt adjustment.”  It requires a debtor to file a plan to pay debts (or parts of debts) from current income.