What are the differences between Chapters 7 and 11 and 13 bankruptcies?

Answer 1

There is a big difference between these two. Chapter 7 is known as a debt liquidation bankruptcy whereas chapter 13 is debt restructuring. Chapter 7 involves getting the majority of your debts discharged (although not all are an option) and chapter 13 reorganizes your debts and the court sets up a payment plan.

Answer 2

There are MAJOR differences between the three types of bankruptcy that demand you familiarize yourself with them and decide which, if any, is the best option for you.

Proceedings under Chapter 7, known as straight bankruptcy, involve taking most of the borrower's property. The court then appoints a trustee to sell off the assets and distribute the cash among the creditors. Proceedings under Chapter 13, known as wage earner's bankruptcy, involve the borrower proposing a plan for repaying a portion of the debt in installments from the borrower's income.

Chapter 11 is a type of reorganization bankruptcy, like Chapter 13. Chapter 11 is available to individuals, corporations, and partnerships. It has no limits on the amount of debt, again, like Chapter 13. Chapter 11 is the typical bankruptcy choice for large businesses seeking to restructure their debt and become profitable again. Chapter 11 is the most flexible of all the bankruptcy chapters, which makes it generally more expensive to the debtor. The rate of successful reorganizations is very low.

Answer 3

Chapter 7, being the most common, is a liquidation proceeding where the debtor's non-exempt assets, are sold by the Chapter 7 trustee and the proceeds are subsequently distributed to creditors according to the priorities among creditors established in the Code. Chapter 7 is available to individuals, married couples, corporations and partnerships. Individual debtors get a discharge within 4-6 months of filing the case. If there are assets which are not exempt, the trustee takes control of those assets, sells them and pays creditors as much as the proceeds permit. Any wages the debtor earns after the case is begun are the debtor's; the creditors have no claim on those earnings.

Chapter 13 is a repayment plan for individuals with regular income and unsecured debt less than $360,475 and secured debt less than $1,081,400. The debtor keeps his property and makes regular payments to the Chapter 13 trustee out of future income to pay creditors over time (3-5 years). Repayment in Chapter 13 can range from 0% to 100% depending on the debtor's income, the value of non exempt assets and the make-up of the debt. Certain debts that cannot be discharged in Chapter 7 can be discharged in Chapter 13 also provides a mechanism for individuals to prevent foreclosures and repossessions, while catching up on their secured debts and to strip off liens that are really unsecured.