What is the difference between a Chapter 7 and Chapter 11, 12 or 13?
Chapter 7 refers to Chapter 7 of the Bankruptcy code, and Chapters 11 and 13 refer to those chapters of the Bankrupcty code. A Chapter 7 bankruptcy is a complete liquidation bankruptcy, where 'liquidation' involves collection of debtor property (except that property that might be exempt in the case of individual persons) into an estate controlled by a trustee. The trustee then sells the property and distributes sale proceeds to various creditors. Chapter 11, 12 and 13 bankruptcies are known as 'reorganizations' wherein the debtor keeps some property instead of transfering to an estate, and the terms of the outstanding debts are changed to help the debtor to continue paying the obligations out of the future income from the property.
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Chapter 7 refers to Chapter 7 of the Bankruptcy code, and Chapters 11 and 13 refer to those chapters of the Bankrupcty code. A Chapter 7 bankruptcy is a complete liquidation bankruptcy, where 'liquidation' involves collection of debtor property (except that property that might be exempt in the case of individual persons) into an estate controlled by a trustee. The trustee then sells the property and distributes sale proceeds to various creditors. Chapter 11, 12 and 13 bankruptcies are known as 'reorganizations' wherein the debtor keeps some property instead of transfering to an estate, and the terms of the outstanding debts are changed to help the debtor to continue paying the obligations out of the future income from the property.
