There are six chapters of bankruptcy in the U.S. Bankruptcy Code: Chapter 7, Chapter 9, Chapter 11, Chapter 12, Chapter 13, and Chapter 15. Each one is built for a different kind of debtor. Individuals typically file under Chapter 7 or Chapter 13. Businesses reorganize under Chapter 11. Chapter 12 is reserved for family farmers and fishermen, Chapter 9 for municipalities, and Chapter 15 for cross-border insolvencies that touch more than one country.1Legal Information Institute. U.S. Code Title 11 – Bankruptcy All six are handled exclusively in federal bankruptcy court.
Which Chapter Fits Which Debtor
The chapter you use depends on who you are and how much you owe.
- An individual who wants debts wiped out quickly and does not need to protect much property: Chapter 7.
- An individual with regular income who wants to keep property and catch up on secured debts: Chapter 13.
- A business that wants to keep operating while restructuring its debts, or an individual whose debts exceed the Chapter 13 limits: Chapter 11.
- A family farmer or commercial fisherman with seasonal income: Chapter 12.
- A city, county, school district, or other municipal entity: Chapter 9.
- A foreign insolvency case that reaches assets or creditors inside the United States: Chapter 15.
Chapter 7: Liquidation
Chapter 7 is the most commonly filed type of bankruptcy in the United States. A court-appointed trustee gathers your nonexempt property, sells it, and pays creditors from the proceeds. In exchange, most remaining eligible debts are wiped out through a discharge. State and federal exemption laws protect essentials such as basic household goods, clothing, retirement accounts, and a limited amount of home equity.
Individuals, corporations, partnerships, and LLCs can all file Chapter 7, but only individuals receive a discharge. When a business files, operations shut down permanently and whatever value remains goes to creditors.2United States Courts. Chapter 13 – Bankruptcy Basics
To qualify as an individual, you have to pass the means test. It compares your average monthly income over the six months before filing against the median income for a household your size in your state. If your income is below the median, you qualify automatically.3U.S. Department of Justice. Means Testing If it is above, a second calculation subtracts allowed monthly expenses; if what remains is too little to fund a meaningful Chapter 13 plan, you still qualify.
Most individual Chapter 7 cases close roughly 80 to 100 days after filing. The court fees total $338: a $245 base filing fee, a $78 administrative fee, and a $15 trustee surcharge.4Office of the Law Revision Counsel. 28 U.S. Code 1930 – Bankruptcy Fees5United States Courts. Bankruptcy Court Miscellaneous Fee Schedule Attorney fees generally run from about $600 to $3,000 on top of that, depending on location and complexity.
Chapter 13: Repayment Plans for Individuals
Chapter 13 lets you keep your property and repay some or all of your debts over three to five years. It is available only to individuals, including sole proprietors, with a regular source of income. Corporations and partnerships cannot use it.6Office of the Law Revision Counsel. 11 U.S. Code 109 – Who May Be a Debtor You propose a repayment plan, and a Chapter 13 trustee collects your monthly payments and distributes them to creditors.2United States Courts. Chapter 13 – Bankruptcy Basics
If your income is below your state’s median for a household your size, the plan runs three years, though the court can approve longer. If your income exceeds the median, the plan generally runs five years, and all your projected disposable income during that time goes to unsecured creditors.
There are debt ceilings. For cases filed between April 1, 2025, and March 31, 2028, your noncontingent, liquidated unsecured debts must be less than $526,700 and your noncontingent, liquidated secured debts must be less than $1,580,125.2United States Courts. Chapter 13 – Bankruptcy Basics Above those numbers, Chapter 11 may be your alternative.
You receive a discharge only after completing every payment under the plan. Fall behind, and the court can dismiss the case or convert it to a Chapter 7 liquidation.
Chapter 11: Business Reorganization
Chapter 11 lets a business restructure its debts while continuing to operate. Corporations, partnerships, and LLCs use it to propose a plan of reorganization that spells out how creditors will be paid over time. The debtor usually stays in control of its assets and daily operations as a “debtor in possession,” rather than turning everything over to a trustee.7United States Courts. Chapter 11 – Bankruptcy Basics Creditors whose rights are affected by the plan vote on it, and the court holds a confirmation hearing. Under certain conditions, the court can confirm a plan even if some creditor classes vote no.8Office of the Law Revision Counsel. 11 U.S. Code 1125 – Postpetition Disclosure and Solicitation
Individuals whose debts exceed the Chapter 13 caps can also file Chapter 11. A streamlined path called Subchapter V is available to small business debtors with combined secured and unsecured debts of $3,424,000 or less, as long as at least half of those debts came from the debtor’s business activities. Subchapter V cases move on shorter deadlines, allow more flexible negotiations, and skip the quarterly U.S. Trustee fees.9U.S. Department of Justice. Subchapter V Small Business Reorganizations
Chapter 11 is the most expensive chapter to file. The court filing fee is $1,167 plus a $571 administrative fee, for a total of $1,738. Outside Subchapter V, the debtor also owes quarterly fees to the U.S. Trustee based on disbursements during the case, starting at $325 per quarter and rising with larger disbursements.5United States Courts. Bankruptcy Court Miscellaneous Fee Schedule
Chapter 12: Family Farmers and Fishermen
Chapter 12 is tailored to the economics of family farming and commercial fishing. These operations carry high capital costs and earn on seasonal cycles, so Chapter 12 permits payment schedules tied to harvest or fishing seasons instead of fixed monthly installments.10United States Courts. Chapter 12 – Bankruptcy Basics
To qualify, more than half of your gross income for the prior tax year (or, for farmers, each of the second and third prior tax years) must come from the farming or fishing operation. Your total debts also cannot exceed these ceilings:
- Family farmers: combined secured and unsecured debts of no more than $12,562,250.
- Family fishermen: combined secured and unsecured debts of no more than $2,568,000.
Both individuals and certain family-owned corporations or partnerships can file Chapter 12. The court filing fee is $278, made up of a $200 base fee and a $78 administrative fee.4Office of the Law Revision Counsel. 28 U.S. Code 1930 – Bankruptcy Fees
Chapter 9: Municipal Bankruptcy
Chapter 9 is reserved for municipalities: cities, counties, townships, school districts, and similar public entities facing insolvency. No other type of debtor can use it, and it is the only chapter these entities can use.11United States Courts. Chapter 9 – Bankruptcy Basics
A municipality cannot decide to file on its own. It must be specifically authorized by its state, through state law or a state-empowered official, before it can seek bankruptcy protection. Because of constitutional limits on federal power over state and local governments, the bankruptcy court cannot order the sale of municipal assets, cannot appoint a trustee to run the municipality, and cannot interfere with its governmental powers, property, or revenues without its consent. Instead, the municipality proposes its own plan to adjust debts, typically by refinancing, extending payment terms, or reducing principal.
Chapter 15: Cross-Border Insolvency
Chapter 15 handles international bankruptcy situations where a debtor has assets or creditors in more than one country. It was added to the Bankruptcy Code in 2005 and is based on the Model Law on Cross-Border Insolvency developed by UNCITRAL in 1997.12United States Courts. Chapter 15 – Bankruptcy Basics
A Chapter 15 case begins when a foreign representative, someone authorized to act in an insolvency proceeding outside the United States, asks a U.S. bankruptcy court to recognize the foreign proceeding.13Office of the Law Revision Counsel. Title 11, Chapter 15 – Ancillary and Other Cross-Border Cases Once recognition is granted, the court can coordinate with the foreign court so that U.S. assets are handled consistently with the main international case. The filing fee is $1,738, the same as a Chapter 11.
What Every Chapter Shares
The Automatic Stay
The moment you file, the automatic stay takes effect. It immediately halts most collection activity, including lawsuits, foreclosures, repossessions, wage garnishments, and creditor phone calls.14Office of the Law Revision Counsel. 11 U.S. Code 362 – Automatic Stay Some proceedings continue anyway: pending criminal prosecutions; actions to establish paternity or to set or modify child support, alimony, custody, or visitation; and domestic violence proceedings such as protective orders.
Debts Bankruptcy Cannot Erase
Some debts survive a discharge no matter which chapter you file under. The most common categories:15Office of the Law Revision Counsel. 11 U.S. Code 523 – Exceptions to Discharge
- Child support and alimony.
- Recent income taxes, and taxes where you filed a fraudulent return or did not file at all.
- Student loans, unless you can prove that repayment would cause “undue hardship,” a standard most courts apply strictly.
- Debts for money, property, or services obtained by fraud or misrepresentation.
- Criminal fines and most penalties owed to government entities.
- Debts arising from willful, intentional harm to another person or their property.
Recent luxury purchases can also stay attached to you. Luxury goods or services charged to a single creditor totaling more than $900 within 90 days before filing are presumed non-dischargeable, and the same applies to cash advances above $1,250 taken within 70 days before filing.
Required Courses
Every individual filer has to complete two courses. Credit counseling must be finished within 180 days before you file, and you submit the completion certificate with your petition. Debtor education, sometimes called a personal financial management course, comes after filing and must be finished before the court will grant your discharge. Both must be taken from providers approved by the U.S. Trustee Program, or the Bankruptcy Administrator in Alabama and North Carolina.16United States Courts. Credit Counseling and Debtor Education Courses Skip either one and your debts will not be discharged.
Credit Report Impact
A bankruptcy filing can stay on your credit report for up to 10 years from the date the court enters the order for relief.17Office of the Law Revision Counsel. 15 U.S. Code 1681c – Requirements Relating to Information Contained in Consumer Reports In practice, the major credit bureaus typically remove a completed Chapter 13 after seven years from the filing date, while a Chapter 7 remains the full 10. New credit will be harder to get during that period, and rates will often be higher, though the impact fades over time as you rebuild positive history.