Meta description: Learn how many types of bankruptcy there are in the United States, what Chapters 7, 9, 11, 12, 13, and 15 mean, and how each process works.
In the United States, there are six main types of bankruptcy cases: Chapters 7, 9, 11, 12, 13, and 15 of the federal Bankruptcy Code. Each chapter provides a different process for dealing with debt, and eligibility depends on factors such as the debtor’s circumstances, income, assets, and type of organization. Individuals most often encounter Chapters 7 and 13, while businesses and municipalities may use other chapters. Knowing what each one does helps explain the choices—and limits—involved in bankruptcy.
How Many Types Of Bankruptcy Are There?
There are six commonly recognized types of bankruptcy in the United States, named for the chapters of the Bankruptcy Code that govern them:
- Chapter 7: Liquidation, available to eligible individuals and businesses.
- Chapter 9: Debt adjustment for eligible municipalities.
- Chapter 11: Reorganization, used mainly by businesses and sometimes by individuals.
- Chapter 12: Debt adjustment for eligible family farmers and family fishers.
- Chapter 13: Debt adjustment through a repayment plan for individuals with regular income.
- Chapter 15: Assistance for cross-border insolvency proceedings.
“Type” usually refers to a case filed under one of these chapters. The Bankruptcy Code also contains Chapters 1, 3, and 5, which set out definitions and general procedures that apply across cases. They are not usually counted as separate bankruptcy filing options. Chapter 10, once associated with corporate reorganization, is not a current filing chapter.
Chapter 7 Bankruptcy: Liquidation
Chapter 7 is often called liquidation bankruptcy. A court-appointed trustee reviews the debtor’s assets, administers any nonexempt property, and distributes proceeds to creditors according to legal priority. Many individual cases are described as “no-asset” cases because state or federal exemptions protect the debtor’s property, leaving nothing for the trustee to distribute. Exemptions vary by jurisdiction and circumstances.
For eligible individuals, Chapter 7 may result in a discharge of many qualifying debts, such as certain credit card balances and medical bills. A discharge generally releases the debtor from personal liability for those debts, but it does not erase every kind of obligation. Certain taxes, most student loans absent a qualifying court finding, child support, alimony, and debts arising from some wrongful conduct may not be dischargeable. A valid lien may also remain attached to property even when personal liability is discharged.
Individuals generally must complete credit counseling from an approved provider before filing. They may also have to pass the Chapter 7 “means test,” which assesses income and allowable expenses under federal rules. Passing the test does not guarantee that filing is appropriate or that every debt will be discharged. Businesses can file Chapter 7, but the process usually winds down the business rather than giving it a repayment plan to continue operating.
Key distinction: Chapter 7 is not simply a way to cancel debt while automatically keeping all assets. The trustee’s review, applicable exemptions, secured claims, and the facts of the case all matter.
Chapter 9 Bankruptcy: Municipal Debt Adjustment
Chapter 9 is designed for eligible municipalities, such as cities, towns, counties, school districts, and certain public entities. It allows a municipality to propose a plan to adjust its debts while continuing to provide essential services. Unlike a private business in Chapter 11, a municipality is not liquidated by a bankruptcy trustee.
Eligibility is limited. A municipality must be specifically authorized to file under state law, be insolvent, desire to adjust its debts, and satisfy other requirements in the Bankruptcy Code. It must also negotiate with creditors or show that negotiations are impracticable or that other statutory conditions apply. Chapter 9 respects state sovereignty: the bankruptcy court cannot generally take control of the municipality’s political or governmental powers or its property and revenues.
Chapter 9 is uncommon compared with individual bankruptcy filings. It is not available to individuals, private companies, or every public agency. The process is intended to address a municipality’s financial obligations through a court-supervised adjustment, not to replace ordinary budgeting or state oversight.
Chapter 11 Bankruptcy: Reorganization
Chapter 11 allows a debtor to reorganize financial obligations under a plan. It is commonly used by businesses seeking to continue operating while restructuring debt, leases, and other commitments. Corporations, partnerships, and individuals may file, although the procedure is often complex and costly. Some eligible small businesses can use streamlined rules under Subchapter V of Chapter 11.
In many cases, the debtor remains in possession of its assets and continues operating as a “debtor in possession,” subject to court oversight and statutory duties. Filing usually triggers an automatic stay that pauses many collection actions, lawsuits, and foreclosures. The stay has exceptions, and a creditor or other party may ask the court for permission to proceed in specific circumstances.
A Chapter 11 plan explains how the debtor proposes to treat claims and interests. Creditors may vote on the plan in relevant circumstances, and the court must confirm it under the Bankruptcy Code. A confirmed plan can reduce, extend, or otherwise modify certain obligations, but it must meet legal requirements and does not guarantee that the business will succeed.
Chapter 11 differs from Chapter 7 because its primary aim is generally reorganization rather than liquidation. However, a Chapter 11 case can end in a sale, conversion to Chapter 7, or dismissal if reorganization is not viable. For qualifying small business debtors, Subchapter V can simplify aspects of the process, but it still involves court procedures, disclosure duties, and a plan.
Chapter 12 Bankruptcy: Family Farmers And Fishers
Chapter 12 provides a repayment process for family farmers and family fishers who meet specific legal requirements. It was created to address the distinctive financial patterns of agricultural and fishing operations, including seasonal income and the need to keep operating assets in productive use.
An eligible debtor proposes a plan, usually lasting three to five years, to repay creditors from future income. The plan must satisfy applicable legal standards and receive court confirmation. Chapter 12 can offer procedures tailored to qualifying farm and fishing businesses, but it is not open to every farmer or fishing operation. The debtor must meet statutory definitions, debt limits, income tests, and other conditions in force at the time of filing.
Because eligibility rules and debt thresholds can change, a person considering Chapter 12 should check current Bankruptcy Code requirements and consult a qualified bankruptcy professional. A business that does not qualify may need to consider another chapter, such as Chapter 11, if it is eligible.
Chapter 13 Bankruptcy: Individual Repayment Plan
Chapter 13 is a repayment-plan bankruptcy for eligible individuals with regular income. Instead of having a trustee liquidate nonexempt assets as in a typical Chapter 7 case, the debtor proposes a plan to make payments over time, generally three or five years. A trustee collects plan payments and distributes them to creditors as required by the plan and the law.
Chapter 13 can help an eligible debtor address certain debts while keeping property, including a home or vehicle, if the debtor can meet the plan and other obligations. In some situations, it can provide a way to catch up on missed mortgage or car payments over time. It does not automatically prevent foreclosure or repossession indefinitely, and ongoing payments and plan requirements remain important. Special rules apply to secured claims and to the treatment of different types of debt.
To file, an individual must meet the applicable debt limits and other eligibility rules, have regular income sufficient to make plan payments, complete required pre-filing credit counseling, and submit required documents. Some debts may remain after the plan, and a discharge is generally available only after the debtor meets the applicable conditions. Chapter 13 is not available to corporations or partnerships as debtors.
Practical difference: Chapter 13 is generally about repaying debts through a court-approved plan. Chapter 7 is generally about liquidation of nonexempt assets and discharge of qualifying debts.
Chapter 15 Bankruptcy: Cross-Border Cases
Chapter 15 handles certain insolvency cases involving more than one country. It lets a representative of a foreign insolvency proceeding seek recognition in a U.S. bankruptcy court and request assistance connected to assets or proceedings in the United States. The chapter is based on an international model law intended to support cooperation between courts and insolvency representatives.
Chapter 15 is not a standard personal bankruptcy option for someone seeking relief from household debt. It is generally used when a foreign insolvency case has a meaningful connection to U.S. property, creditors, or proceedings. Recognition may provide tools such as a stay or court assistance, depending on the case and applicable law.
Which Bankruptcy Chapters Apply To Individuals?
For individual debtors, the most familiar choices are Chapters 7 and 13. Chapter 11 may also be available in certain situations, including for individuals whose debts or financial circumstances do not fit another chapter. Chapter 12 is an option for individuals who meet the specialized family-farmer or family-fisher requirements. Chapters 9 and 15 serve different purposes and generally are not personal debt-relief chapters.
| Chapter | Typical debtor | General purpose |
|---|---|---|
| 7 | Eligible individuals and businesses | Liquidate nonexempt assets and discharge qualifying debts |
| 9 | Eligible municipalities | Adjust municipal debts while continuing public services |
| 11 | Businesses and some individuals | Reorganize debt through a court-approved plan |
| 12 | Eligible family farmers and fishers | Repay debts through a plan tailored to farm or fishing income |
| 13 | Eligible individuals with regular income | Repay debts over time under a court-approved plan |
| 15 | Foreign insolvency representatives and related parties | Coordinate cross-border insolvency proceedings |
How To Compare Bankruptcy Types
The right chapter depends on more than the total amount of debt. Important factors can include the debtor’s income, assets, secured debts, business structure, eligibility, and goals. A person trying to protect a home while catching up on missed payments may assess Chapter 13 differently from someone with little nonexempt property and primarily unsecured debt. A business seeking to keep operating may evaluate Chapter 11 rather than Chapter 7.
Before filing, a debtor should consider the effect on property, co-signers, credit, contracts, and ongoing obligations. Bankruptcy can trigger an automatic stay, but the stay is not permanent in every case and does not resolve every creditor issue. Filing also involves required disclosures, court fees, deadlines, and potential consequences for assets and future borrowing.
Bankruptcy law is federal, but exemptions and some procedures vary by state. A state’s exemption system may determine which property an individual can protect, and residency rules can affect which exemptions apply. Legal advice is particularly important when a debtor owns a business, has substantial assets, faces foreclosure or litigation, or is unsure whether a debt can be discharged.
Reliable Sources For Bankruptcy Information
The U.S. Courts Bankruptcy Basics explains the main chapters and the court process. The U.S. Code contains the Bankruptcy Code, including the provisions governing eligibility and case procedures. The U.S. Trustee Program provides information about approved credit counseling and debtor education providers, as well as oversight of many bankruptcy cases.
These resources offer general information, not advice for a particular case. Bankruptcy eligibility, exemptions, discharge rules, and local procedures can depend on individual facts and current law. A licensed attorney or an approved nonprofit credit counselor can help explain options and their likely consequences.