If you are contemplating a bankruptcy filing, you may not consider your choices. There is more than a single type, although, when most people say "bankruptcy" they are very likely referring to a chapter 7 type. The bankruptcy code numbers are responsible for the different names of the several different types of bankruptcy. The two most common types of bankruptcy are chapter 7 and chapter 13 but there are actually several more. Read on for an explanation of the bankruptcy chapters.
Chapter 7 Bankruptcy
This most well-known bankruptcy type benefits people who have a lot of unsecured debt and not a lot of property to lose. Almost all credit card debt will be wiped out with a chapter 7 but the bankruptcy trustee may seize some of your property if you cannot use enough exemptions or its value is high.
Chapter 13 Bankruptcy
This is the second-most popular way to deal with mounting debt. This form of bankruptcy allows you to keep your property but is not meant to totally eliminate your debts. It just gives you more time to pay them. If you abide by the payment plan, however, the debts that remain are discharged at the end. This form of bankruptcy does get creditors off your back and looks somewhat better on your credit report.
Chapter 9 Bankruptcy
If your city has ever declared bankruptcy, it might have been chapter 9. This form of bankruptcy allows cities to get their financial act together and holds off creditors for the time-being. Cities can get in trouble from having too many debts just like private consumers do.
Chapter 11 Bankruptcy
This type of bankruptcy is similar to a chapter 13 in that it is meant to be a debt reorganization tool. Businesses can remain open while they make plans to pay their obligations. The bankruptcy courts take over the financial end of a business in a chapter 13 plan but the business continues to operate alongside the courts to (hopefully) produce earnings.
Chapter 12 Bankruptcy
This form of bankruptcy is aimed exclusively at farmers and fishermen. This plan makes unique allowances for the cyclical, seasonal nature of the farming and fishing industries.
Chapter 15 Bankruptcy
This form of bankruptcy provides protection for those who have debts and assets in more than one country in addition to the United States. The bankruptcy courts work with the other country by taking part in legal procedures in both countries. The debts and assets are evaluated depending on the country where they are held.
Contact a bankruptcy attorney for more information.