Bankruptcy is defined as a legal situation in which a debtor cannot fulfill their monetary obligations. Debtor bankruptcy is when the person who owes the money files for it. There are six types of bankruptcy chapters in the United States for which a person can file and they are the following:

Chapter 7 Bankruptcy 

Chapter 7, also called Liquidation Bankruptcy, is the easiest and quickest type of bankruptcy, making it the most common types of bankruptcies.  With this type of bankruptcy chapter, a debtor would surrender his/her non-exempt assets to a trustee who will then distribute the proceeds to the people owed.  However, the debtor may be able to keep certain exempt assets.   

Chapter 9 Bankruptcy 

Chapter 9 is known as Adjustment of Debts of a Municipality.  This kind of bankruptcy is for municipalities, which include cities, towns, counties, school districts, and such. 

Chapter 11 Bankruptcy 

Chapter 11 Bankruptcy, also identified as Reorganization Bankruptcy, is for businesses.  You can be a sole proprietor or a corporation and be eligible for chapter 11 bankruptcy.  This chapter of bankruptcy allows an individual or company to enter into a repayment plan agreement with creditors under which all or part of the business continues to operate.   

Chapter 12 Bankruptcy 

This type of debtor bankruptcy code, also named Adjustment of Debts of a Family Farmer, applies to farmers and fishermen who have regular income.  It is similar to Chapter 13, where a debtor will propose a plan to repay the debt over a certain period of time approved by the court. 

Chapter 13 Bankruptcy 

Chapter 13 bankruptcy can also be referred as Adjustment of Debts of an Individual with Regular Income.  Chapter 13, along with Chapter 7, is also a very common type of bankruptcy filing.  Chapter 13 is where the debtor retains all of their possessions but promises to surrender a portion of their upcoming earnings to the creditors.  Chapter 13 debtors have a period of three to five years to pay everything off. 

Chapter 15 Bankruptcy 

Chapter 15 is entitled as Ancillary and Other Cross Border Cases.  As the name implies, this form of bankruptcy deals with cases of cross-border insolvency.  This chapter provides a mechanism which will offer assistance for foreign debtors to clear their debt problems. 

These are all the types of bankruptcy in the United States.  All of the bankruptcy cases will be handled in a court of law.  The process for the bankruptcy can take anywhere from months to years, depending on how severe the case is.  Going bankruptcy will affect the person’s credit for years. 

There are many ways an individual or a company can get out of debt before having to file for bankruptcy. One great help would be by using counseling services. If a person or a company encounters a situation in which they must file, it is recommended that they contact a lawyer who specializes in Bankruptcy.