Several types of bankruptcy are provided in the Bankruptcy Code. The most common are Chapter 7, Chapter 11, Chapter 12 and Chapter 13.
Chapter 7 is generally referred to as a regular or straight bankruptcy. In a Chapter 7, all non-exempt property is sold by the Chapter 7 Trustee and the money is used to repay creditors.
Chapter 11 is generally for business bankruptcies. A Chapter 11 is used to reorganize debts, assets and operations to remain in business and repay creditors from future cash flow.
Chapter 12 is a similar reorganization plan for family farmers. The debtor is a Chapter 12 will submit a plan to the Trustee and to the Court and will repay their creditors according to that plan.
Chapter 13 is a reorganization/repayment plan for individuals or families with regular income. In a Chapter 13, the debtors pay money to the Trustee under a court-approved repayment plan. The plan will generally run from 36-60 months. Chapter 13 bankruptcies are voluntary.