General Bankruptcy Overview
There are three types of bankruptcy cases --- Chapters 7, 11, and 13. Separate pages explaining each Chapter in detail can be found on this website. A brief summary follows:
The goal for individuals who file Chapter 7 is to free themselves of debt through a bankruptcy discharge. Although businesses normally do not receive a discharge, corporations and partnerships may use Chapter 7 to liquidate and close their business.
Corporations, partnerships, and sole proprietors wishing to remain in business and reorganize their financial affairs may file Chapter 11. These debtors seek to restructure their debts, either by reducing the debt or by extending the time to repay. A Chapter 11 plan can also be used to liquidate all or a portion of a debtor's assets.
Chapter 13 is for individuals with regular income who want to reorganize their financial affairs. The debtor proposes a repayment plan, say to catch up on the arrears on their home mortgage. Only individuals and sole proprietors are eligible for Chapter 13, which is simpler and much less expensive than a Chapter 11.