Table of Contents
- Federal Bankruptcy Code Overview: Chapters 7, 9, 11, 12, 13, & 15
- Chapter 7 – Liquidation Bankruptcy
- Chapter 9 – Municipal Bankruptcy
- Chapter 11 – Reorganization for Businesses (and High-Debt Individuals)
- Chapter 12 – Bankruptcy for Family Farmers and Fishermen
- Chapter 13 – Wage Earner’s Plan
- Chapter 15 – Cross-Border Insolvency Cases
- Why This Matters: Know Your Chapter Before You File
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Understanding the U.S. Bankruptcy Code is essential for individuals and businesses facing financial challenges. This overview covers the key chapters—7, 9, 11, 12, 13, and 15—highlighting their distinct purposes and processes, and emphasizes the importance of consulting an experienced attorney near you to navigate your legal options effectively.
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Explore the key chapters of the U.S. Bankruptcy Code, including Chapters 7, 9, 11, 12, 13, and 15, to understand your legal options for debt relief. Whether you're an individual or business, find a qualified bankruptcy attorney near you to guide you through the process and ensure the best outcome for your financial situation.
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Flat vector illustration of the six key chapters of the U.S. Bankruptcy Code with icons representing Chapter 7, 9, 11, 12, 13, and 15, including visuals of debt, city hall, business charts, agriculture, paycheck protection, and global insolvency.
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Mar 30, 2025 06:18 PM
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Federal Bankruptcy Code Overview: Chapters 7, 9, 11, 12, 13, & 15
When people hear “bankruptcy,” they often think of Chapter 7 or Chapter 13 — but those are just two parts of a much broader legal framework known as the U.S. Bankruptcy Code. In fact, there are several different chapters under the federal bankruptcy law, each designed for different types of debtors and financial circumstances.
In this post, we’ll provide a plain-language overview of the six most important chapters: Chapters 7, 9, 11, 12, 13, and 15. Whether you’re an individual, a business owner, or simply trying to understand your legal options, this guide will help clarify the distinctions — and why having an experienced bankruptcy attorney near you is essential for navigating the process.
💡 For every post in this series, scroll down to “Related Posts.”
Chapter 7 – Liquidation Bankruptcy
Who it’s for: Individuals or businesses who can’t afford to repay their debts.
Chapter 7 is the most common form of bankruptcy. It allows debtors to discharge most unsecured debts (like credit cards, personal loans, and medical bills) by liquidating non-exempt assets. A court-appointed trustee sells the assets and distributes proceeds to creditors. In most personal cases, exemptions allow filers to keep essential property like their home, car, and retirement savings.
Key points:
- Quick discharge (typically 3–6 months)
- Stops collections through an automatic stay
- Can protect key assets through state or federal exemptions
Chapter 9 – Municipal Bankruptcy
Who it’s for: Cities, towns, counties, and other public entities.
Chapter 9 is designed specifically for municipalities facing financial insolvency. It allows them to restructure debts without liquidating assets or dissolving. Detroit’s 2013 bankruptcy case — the largest municipal filing in U.S. history — was a Chapter 9 case.
Key points:
- Only available to government entities
- Used to renegotiate obligations like pensions, bonds, and contracts
- No asset liquidation involved
Chapter 11 – Reorganization for Businesses (and High-Debt Individuals)
Who it’s for: Businesses and individuals with complex financial situations or high debt loads.
Chapter 11 allows debtors to keep operating while reorganizing debt under a court-approved plan. It’s commonly used by corporations but is also available to individuals who exceed Chapter 13 debt limits.
Key points:
- Keeps business operations running
- Complex and expensive, but flexible
- Plan approval requires creditor and court agreement
Chapter 12 – Bankruptcy for Family Farmers and Fishermen
Who it’s for: Family farmers and fishermen with regular annual income.
Chapter 12 offers a streamlined reorganization process for agricultural or fishing families. It’s similar to Chapter 13 but tailored to the seasonal nature of these industries.
Key points:
- More flexible repayment terms
- Higher debt limits than Chapter 13
- Designed to keep family farms or fishing operations running
Chapter 13 – Wage Earner’s Plan
Who it’s for: Individuals with steady income who want to repay debts over time.
Chapter 13 allows debtors to keep their property while making manageable payments over 3–5 years. It’s ideal for those who’ve fallen behind on secured debts (like mortgages or car loans) but want to catch up and avoid foreclosure or repossession.
Key points:
- Repayment plan approved by court
- Stops foreclosure and repossession
- Protects assets while offering debt relief
Chapter 15 – Cross-Border Insolvency Cases
Who it’s for: Foreign companies or individuals with U.S. assets or interests.
Chapter 15 helps coordinate international bankruptcy cases involving foreign debtors. It’s designed to promote cooperation between U.S. courts and foreign legal systems, ensuring orderly handling of global insolvency proceedings.
Key points:
- Recognizes foreign bankruptcy proceedings
- Facilitates international debt resolution
- Mostly used in multinational corporate cases
Why This Matters: Know Your Chapter Before You File
Bankruptcy is not a one-size-fits-all solution. Each chapter exists to address different financial realities, legal considerations, and debtor needs. That’s why working with a bankruptcy attorney near you is so important — they’ll help determine which chapter fits your circumstances and guide you through the filing process.
ReferU.AI connects individuals, families, businesses, and municipalities with experienced bankruptcy lawyers near you who understand the nuances of the federal code and your state’s laws. Get matched today with an attorney who can help you chart the best path forward.
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