FAQs & Resources

A consumer debtor can discharge most or all of his debts in a successful Chapter 7 case. The Chapter 7 process liquidates the debtor’s assets valued above certain thresholds in order to pay creditors a fraction of what they are owed; however, many debtors are able to keep all of their property.

People choosing Chapter 7 bankruptcy include:

1. Debtors who do not own homes or have any other significant assets that serve as collateral and that they want to retain.

2. People whose debt burdens far exceed their ability to repay, even over time;

3. People whose debts stem from unemployment or disability.

In Chapter 13, a debtor repays some or all his debts on a plan that lasts three to five years.  The debtor makes monthly payments to the trustee or bankruptcy administrator, who then distributes each monthly payment to creditors.  Most debts remaining at the end of that period are discharged.

Businesses may file for bankruptcy under Chapter 7 or Chapter 11. When filing under Chapter 7, the end result is dissolution of the business, not reorganization. Most businesses use Chapter 11 to restructure their finances. That's why a case filed under Chapter 11 is often referred to as a "reorganization."Chapter 11 cases are usually filed by corporations, partnerships, and limited liability companies.

Chapter 12 bankruptcy has been and remains an effective way to help farmers restructure their farming operations, reduce or eliminate debt, and concentrate on returning the farm to profitability and preserving the farm for generations to come.

Certain debts are non-dischargeable in Bankruptcy.  These debts may include certain long-term debts, alimony, child support, and most student loans.