Chapter 7
Chapter 7 of the United States Bankruptcy Code governs the process of liquidation under the bankruptcy laws of the United States. Chapter 7 is the most common form of bankruptcy. Individual debtors must qualify for Chapter 7 based on household income or business loss. Chapt 7 liquidation is always available for commercial debtors ready to shut down business operations. Chapter 7 takes approximately 90 days.
Chapter 11
Chapter 11 of the United States Bankruptcy Code permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or otherwise, and to individuals whose debt exceeds the Chapter 13 debt limitations (see below). Chapter 11 is a lengthy bankruptcy proceeding generally lasting 18 to 32 months. However, Chapter 11 is ideal for business entities that need an opportunity to restructure the repayment of its commercial loan obligation.
Chapter 13
Chapter 13 of the United States Bankruptcy Code allows individuals to undergo a financial reorganization supervised by the bankruptcy court and a trustee. Chapter 13 is available for individuals only (ie, no business entities) with secured debts under $ and unsecured debts under $. The goal of Chapter 13 is to rehabilitate an income earning debtor through the creation of a viable repayment plan. Chatper 13 is typically used to stop foreclosure or repossesion and has a timeframe of 3-5 years.
