Bankrutcy

CHAPTER 7

Chapter 7 bankruptcy, which is also known as straight bankruptcy is a liquidation proceeding. The debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors. The debtor receives a discharge on all dischargeable debts shortly after filing. The process can take anywhere between one to six months depending on the amount of debt owed and amount of creditors owed to.  In the vast majority of cases the debtor has no assets that he would lose, so Chapter 7 will give that person a relatively quick "fresh start". Obtaining a discharge with Chapter 7 is only possible once every six years.

CHAPTER 13

People with solid income are allowed to file for bankruptcy through Chapter 13, which then permit them to maintain property. A debtor can offer an arrangement to pay back a default to creditors and make up any past due payments. This process can take between three to five years for repayment. After paying off all payments on the arrangement, the debtor obtains a discharge of their debts.

CHAPTER 11
Chapter 11 is a form of corporate financial reorganization that permits corporations to stay in operation while they follow debt repayment arrangements.  Filing for Chapter 11 is mainly for companies who have trouble paying off their creditors, and or paying off all of their debts.  Chapter 11 is for corporations who want to remain in business while bankruptcy court deals with the reorganization of the company. The court may give relief to the company by discharging a portion of the company's debt and contracts they can have a "fresh start."