What is the difference between chapters 7, 11 and 13?
Chapter 7 is often called the “liquidation chapter”. It is used by individuals, partnerships or corporations who have no hope for repairing their financial situation. In Chapter 7, the debtors estate is liquidated under the rules of the Bankruptcy Code. Liquidation is the process through which the debtors nonexempt property is sold for cash by a trustee and the cash is distributed to creditors. Chapter 11 is often called the “reorganization chapter”. It allows corporations, partnerships, and individuals to reorganize their debts, without having to liquidate all their assets. In a Chapter 11 case, the debtor presents a plan to creditors which, if accepted by the creditors and approved by the Court, will allow the debtor to reorganize personal financial or business affairs and again become financially productive. Chapter 13. An individual with regular income who is overcome by debts, but believes such debts can be repaid within a reasonable period of time, may file under Chapter 13 of th
