What is the difference in bankruptcy “Chapters”?
Chapter 7 bankruptcy requires the bankruptcy trustee to collect and sell all non-exempt property that is not mortgaged, and then distribute any proceeds to creditors. An individual proceeding under Chapter 7 is permitted to retain from the trustee sale exempt property (discussed below). Following the sale the debtor is discharged of certain types of debts. Corporations and partnerships, however, are not entitled to discharges. Chapter 7 bankruptcy is known as “straight bankruptcy” or “liquidation.” Chapter 9 bankruptcy is reserved for governmental entities such as school districts, water districts, municipalities, etc. Chapter 12 bankruptcy is limited to those who meet the qualifications as family farmers. Chapter 11 bankruptcy is designed to allow debtors with substantial debt or income to reorganize to pay their debts. Creditors are involved in the process or restructuring to the extent that they can vote to accept or reject a debtor plan fro restructuring to pay their debts. Chapter
