What is a chapter 7, 11, 12, and 13 Bankruptcy?
Chapter 7 is the most frequently used chapter because it involves the complete liquidation of a debtor’s property. If you use Chapter 7 you may lose your home (depending on your state) but it does enable you to get out from under the burden of debt more quickly. Chapter 11 is typically used for business bankruptcies and restructuring. It is not commonly used by individual consumers since it is far more complex and expensive to pursue. Chapter 12 allows farmers with real estate debts to pay off the debts from the profits generated by future crops. Chapter 13 is used by about 25% of consumers. In Chapter 13, consumers work out a periodic payment plan with their creditors to pay off their debts, or at least substantial portions of the debt. One of the important benefits of Chapter 13 is that debtors generally continue to live in their home so long as they comply with the terms of the Chapter 13 arrangement. If the debtor fails to comply, the Court treats the matter as a Chapter 7 liquidat
