White-Collar Crime

Bankruptcy Fraud: Types of Bankruptcy Filings

There are two basic types of bankruptcy filings: liquidation under Chapter 7 and rehabilitation of the debtor under Chapters 11, 12, and 13.

  • Chapter 7—allows the sale of personal or business assets to pay debts. In some cases, eligible debtors may receive discharges from their debts, except for debts related to taxes, child support and alimony payments.
  • Chapter 11—the debtor is usually a business. In this process the business is allowed to repay debts while continuing to operate. The debtor, with the participation of creditors, creates a reorganization plan allowing the repayment of all or part of the debt.
  • Chapter 12—the debtors are eligible family farm businesses. The provision allows family farm businesses to file for bankruptcy, reorganize the farm’s business affairs while the business continues to operate, and repayment of all or part of the farm debts.

  • Chapter 13—allows individual wage earners to reorganize their financial affairs under a repayment plan that must be completed within three to five years.