Skip to main content

What are the different types of bankruptcy available and what is the difference between them?

Decatur, AL |

I know there is Chapter 13, 11 and 7, but know no details about them.

Attorney Answers 1


Chapters 7 and 13 are the normal types of bankruptcy filed by individuals. A Chapter 7 is known as a "liquidation" or "straight" bankruptcy, and is the simplest type. In a Chapter 7, any non-exempt property of the debtor is sold and the proceeds are distributed to creditors. However, it is rare for a Chapter 7 debtor to have any non-exempt property, so generally creditors are paid nothing in a Chapter 7 case. The debtor is relieved of most debts, although there are exceptions such as child support, taxes, and student loan debts. Also, if the debtor is making house payments, car payments, or other payments on debts for which there is collateral, the debtor must be current on those debts or the property may be lost.

A Chapter 13 case is known as a "wage earner" plan, and provides a payment plan for people who either have too much income to qualify for a Chapter 7 or need a payment plan in order to pay late mortgage payments, car payments, taxes, child support, or other debts that are not dischargeable in bankruptcy. A Chapter 13 case lasts from three to five years, and payments are made each month to a bankruptcy trustee, who then distributes those payments to creditors.

If you are considering bankruptcy, I strongly suggest that you consult with an experienced attorney in your area and find out what your options are. Bankruptcy is a very complex area of the law, and only an experienced attorney who has analyzed your individual situation can give you the best advice.

Mark as helpful

Bankruptcy and debt topics

Recommended articles about Bankruptcy and debt

What others are asking

Can't find what you're looking for?

Post a free question on our public forum.

Ask a Question

- or -

Search for lawyers by reviews and ratings.

Find a Lawyer

Browse all legal topics