What Is The Difference Between Chapter 7, Chapter 9, Chapter 11, Chapter 12 and Chapter 13 Bankruptcy?

by Susanne Robicsek, North Carolina Bankruptcy Attorney

May 29, 2007

There are five different kinds of bankruptcy cases:

Chapters 7, 9, 11, 12. and 13.

They are named after the chapters of the bankruptcy code book that contains the rules specific to that kind of bankruptcy.

These five kinds of cases are divided into two different types of bankruptcy cases:

1) Straight/Liquidation – Chapter 7 only.
2) Reorganization – Chapters 9, 11, 12 and 13.

Chapter 7 is for a person, company or corporation and will discharge the filing debtor in exchange for giving up assets. It is for people who can not afford to pay back their debts. People who file Chapter 7 are able to keep some of their assets. It may be everything they own, or it may not be. What they keep varies from state to state.

Chapter 9 is a reorganization for municipalities (cities).

Chapter 11 is a reorganization for corporations, or individuals with debts over $336,900 in unsecured debts (no collateral) and secured debts (with collateral) over $1,010,650. (These numbers were current for April 2007, and are adjusted upwards periodically)

Chapter 12 is a reorganization for farmers.

Chapter 13 is a reorganization for individuals (people). It is for people who have under $336,900 in unsecured debts and secured debts under $1,010,650 (April 2007.) This is the reorganization used by most consumers. Chapter 13 is for people who have money to make payments but maybe not as fast or as much as the creditors want. Chapter 13 helps people keep assets they might not be able to keep if they filed Chapter 7. It can also reorgnize aspects of secured debts. It can stop foreclosures and repossessions, and give people time to catch up on payments over time.

See also: Doug Jacobs’ article February 16, 2008: What Is The Difference Between A Chapter 7 And A Chapter 13 For Consumers

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Concentrating in Consumer Bankruptcy Law since 1988; Wake Forest Law School JD 1987 Law Office of Susanne M. Robicsek since 1993, Law Clerk to Judge Rufus Reynolds, US Bankruptcy Judge for Middle District of NC; Burns Price & Arneke, PA, David Badger and Associates, PA.

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