Chapter 13:
Chapter 13 is entitled Adjustment of Debts of an Individual With Regular Income, and is designed for an individual debtor who has a regular source of income.  A particular advantage of chapter 13 is that it provides individual debtors with an opportunity to save their homes from foreclosure by allowing them to “catch up” past due payments through a payment plan.  In a  Chapter 13 case, the debtor keeps a valuable asset, such as a house, and it allows the debtor to propose a “plan” to repay creditors over time – usually three to five years.  Chapter 13 is also used by consumer debtors who do not qualify for chapter 7 relief under the means test.

Chapter 13 is very different from chapter 7 since the chapter 13 debtor usually remains in possession of the property of the estate and makes payments to creditors, through the trustee, based on the debtor’s anticipated income over the life of the plan.  At a chapter 13 confirmation hearing, the court either approves or disapproves the debtor’s repayment plan, depending on whether it meets the Bankruptcy Code’s requirements for confirmation.  Unlike chapter 7, the debtor does not receive an immediate discharge of debts. The debtor must complete the payments required under the plan before the discharge is received. The debtor is protected from lawsuits, garnishments, and other creditor actions while the plan is in effect. The discharge is also somewhat broader (i.e., more debts are eliminated) under chapter 13 than the discharge under chapter 7.

Chapter 11:
Chapter 11 is entitled Reorganization, and is ordinarily is used by commercial enterprises that desire to continue operating a business and repay creditors concurrently through a court-approved plan of reorganization.  Under chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization.  The court ultimately approves (confirms) or disapproves the plan of reorganization. Under the confirmed plan, the debtor can reduce its debts by repaying a portion of its obligations and discharging others. The debtor can also terminate burdensome contracts and leases, recover assets, and rescale its operations in order to return to profitability. Under chapter 11, the debtor normally goes through a period of consolidation and emerges with a reduced debt load and a reorganized business.

Chapter 12:
Chapter 12 is entitled Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income, and it provides debt relief to family farmers and fishermen with regular income. Chapter 12 allows a family farmer or fisherman to continue to operate the business while the plan is being  carried out. The process under chapter 12 is very similar to that of chapter 13, under which the debtor proposes a plan to repay debts over a period of time – no more than three years unless the court approves a longer period, not exceeding five years. There is also a trustee in every chapter 12 case whose duties are very similar to those of a chapter 13 trustee. The chapter  12 trustee’s disbursement of payments to creditors under a confirmed plan parallels the procedure under chapter 13.

 The foregoing chapters in bankruptcy, 7, 13, 11, and 12 are the most common types filed.  The other two types are briefly explained below.

Chapter 9:
Is entitled Adjustment of Debts of a Municipality, and it provides essentially for reorganization, much like a reorganization under chapter 11. Only a “municipality” may file under chapter 9, which includes cities and towns, as well as villages, counties, taxing districts, municipal utilities, and school districts.

Chapter 15:
The purpose of Chapter 15, entitled Ancillary and Other Cross-Border Cases, is to provide an effective mechanism for dealing with cases of cross-border insolvency.  Chapter 15 will apply where a debtor or its property is subject to the laws of the United States and one or more foreign countries.