The Different Types of Bankruptcy - KTRE.com | Lufkin and Nacogdoches, Texas

The Different Types of Bankruptcy

NOTICE: The answers given are general information only and are not intended to be legal advice. You are advised to seek the services of a competent, experienced bankruptcy lawyer for legal advice about your specific situation.

Depending upon your financial situation, you can choose the kind of bankruptcy that best meets your needs:

  • Chapter 7 - A trustee is appointed to take over any of your property which is not exempt or protected from seizure. Any property of value will be sold or turned into money to pay your creditors. You are normally able to keep many personal items, motor vehicles, retirement benefits, and your home depending on the law of the state where you live.
  • Chapter 13 - You can usually keep your property, but you must earn wages or have some other source of regular income and you must agree to pay part of your income to your creditors. The Court must approve your repayment plan and your budget. A trustee is appointed and will collect the payments from you, pay your creditors, and make sure you live up to the terms of your repayment plan. Only an individual can file for Chapter 13, not corporations or partnerships.
  • Chapter 12 - Like chapter 13, but it is only for family farmers.
  • Chapter 11 - This is used mostly by businesses, especially corporations and partnerships. In Chapter 11, you may continue to operate your business, but your creditors and the Court must approve a plan to repay your debts. There is no trustee unless the Judge decides that one is necessary; if a trustee is appointed the trustee takes control of your business and property.
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