Which Bankruptcy Should I File

There are two different types of bankruptcy that you can file – “liquidation” or “reorganization.”
Liquidation bankruptcy is called a Chapter 7 because its rules are in Chapter 7 of the Bankruptcy Code. In a Chapter 7, some of your property might be liquidated (i.e. sold) to pay off some of your debt and in exchange most or all of your remaining debt will get wiped out. An individual can file for a Chapter 7 – this is called a “consumer” Chapter 7 bankruptcy, or a business can file a Chapter 7 bankruptcy – this is called a “business” Chapter 7 bankruptcy. Chapter 7 takes about three to six months on average.
Reorganization bankruptcy lets you pay down your debt over time by letting you devote a part of your income towards paying it off. There are three different types of reorganization bankruptcies:
1. Chapter 13 – this is for individuals only. This usually takes three to five years.
2. Chapter 11 – this is for businesses and for individuals with very large debts.
3. Chapter 12 – this is for individuals whose debts are mostly from the operation of a family farm.

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