What are the different types of bankruptcy?

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What are the different types of bankruptcy?

There are two basic types of bankruptcies. The first is called a liquidation (chapter 7). In a chapter 7 an individual keeps certain items (house, furnishings, car, pension plan - see list of Arizona exemptions. Each state has a different list of exemptions.

The second type is a reorganization (chapter 11, 12 and 13). Each reorganization chapter is different and used for specific purposes. Individuals usually file a chapter 13 in order to cure the arrearages on their homes, deal with the debt on their cars, and/or manage the payments on their tax debts. Chapter 12 is for farmers or fishermen - so that they can reorganize the debt on their livelihood. Chapter 11 is for businesses. Chapter 11 also has two mini-chapters for (a) small businesses and (b) companies that own only a single asset.

Under the 2005 Bankruptcy Reform Act a Chapter 15 bankruptcy was created to deal with Cross-Boarder Bankruptcy cases.