Bankruptcy chapters available to consumers: 7, 11, 12 and 13

What are the bankruptcy chapters available to consumers?

Individuals who meet the applicable requirements may file under Chapter 7, Chapter 11, Chapter 12 or Chapter 13. The notice required for an individual with primarily consumer debts describes Chapter 7 as liquidation, Chapter 11 as reorganization, Chapter 12 as a voluntary repayment plan for family farmers or fishermen, and Chapter 13 as a voluntary repayment plan for individuals with regular income (11 U.S.C. § 342; Bankr. E.D. La. official guidance — Chapter 7 Form Packet). A consumer debt is one incurred by an individual primarily for a personal, family or household purpose (11 U.S.C. § 101). Chapters 1, 3 and 5 are not alternatives a consumer selects. They provide definitions and administrative rules that apply within cases under Chapters 7, 11, 12 and 13 (11 U.S.C. § 103). Most consumer comparisons focus on Chapters 7 and 13, but individuals are not categorically excluded from Chapters 11 or 12.

Why does the chapter matter in a bankruptcy case?

The chapter determines the legal structure of the case, including whether the process centers on liquidation or a plan. Bankruptcy law can address debt through the liquidation of assets or through a repayment plan (Bankr. D. Md. official page — Legal Overview). In Chapter 7, a trustee may sell property to pay debts, subject to the individual's ability to claim property as exempt. Exemptions are not automatic; the property must be identified on Schedule C (Bankr. S.D. Iowa official guidance — Instructions - Bankruptcy Forms for Individuals). Chapters 11, 12 and 13 instead use plans, but their eligibility, confirmation and discharge provisions are not interchangeable. For example, Chapter 13 generally provides a discharge after completion of the payments required by the plan, subject to the exceptions listed in the statute (11 U.S.C. § 1328). Chapter 11 ordinarily connects discharge to plan confirmation for a non-individual debtor, while an individual Chapter 11 debtor generally must complete plan payments (11 U.S.C. § 1141).

How does the Code decide which chapters a person can use?

Section 109 is titled “Who may be a debtor” and sets boundaries for the different chapters. It begins with a geographic connection: a person must reside or have a domicile, place of business or property in the United States, unless the debtor is a qualifying municipality (11 U.S.C. § 109). The Code defines “person” to include an individual, partnership and corporation (11 U.S.C. § 101). Section 109 then excludes particular people or entities from particular chapters. For example, its Chapter 7 exclusions include railroads, domestic insurance companies, banks, credit unions and several similar financial institutions. The official consumer notice supplies the basic descriptions relevant to individuals: Chapter 12 is for qualifying family farmers or fishermen, and Chapter 13 is for individuals with regular income (Bankr. E.D. La. official guidance — Chapter 7 Form Packet). These descriptions identify the chapters, but the full statutory requirements and a person's financial facts determine whether a particular case can proceed.

Can individuals and businesses use the same bankruptcy chapters?

Some chapters overlap, but individuals and business entities do not receive identical treatment. Chapter 13 is for individuals with regular income and is not available to a corporation, partnership or limited liability company (11 U.S.C. § 109; U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter: What can Bankruptcy do for you? What will it do to you?). Chapter 7 may involve an individual or another qualifying person, but Chapter 7 grants a discharge only to an individual (11 U.S.C. §§ 101 and 727). Chapter 11 is different. Confirmation of a Chapter 11 plan ordinarily discharges the debtor from covered preconfirmation debts, including when the debtor is a qualifying corporation, partnership or limited liability company, subject to the plan, the confirmation order and statutory exceptions (11 U.S.C. § 1141). One exception applies when the plan liquidates substantially all estate property, the debtor does not continue in business, and the debtor would be denied a Chapter 7 discharge under § 727(a) (11 U.S.C. § 1141).

How does Chapter 7 differ from Chapter 13?

Chapter 7 is a liquidation process, while Chapter 13 is a plan process for an individual with regular income. In Chapter 7, a trustee may sell non-exempt property to pay creditors, and the individual must list any claimed exemptions on Schedule C (Bankr. S.D. Iowa official guidance — Instructions - Bankruptcy Forms for Individuals). In Chapter 13, the debtor makes the payments required by a confirmed plan, and the completed-plan discharge is generally entered after those payments and any required domestic-support certification (11 U.S.C. § 1328). Both chapters generally begin with a petition whose filing triggers the automatic stay against covered collection activity (11 U.S.C. § 362; Bankr. D. Md. official page — Legal Overview). Chapter 13 also has a separate codebtor stay for consumer debt. Subject to statutory exceptions and possible court relief, it restricts collection from an individual who is liable on that debt with the debtor or who secured it (11 U.S.C. § 1301).

How do discharge rules differ among the chapters?

A discharge addresses personal liability for covered debts and bars collection of those debts as personal liabilities, but each chapter defines its own scope and conditions (11 U.S.C. § 524). Chapter 7 limits discharge to an individual and lists grounds for denying it (11 U.S.C. § 727). Chapter 11 ordinarily discharges covered preconfirmation debts when a plan is confirmed, subject to the plan, confirmation order and statutory exceptions; an individual Chapter 11 debtor remains subject to the exceptions in § 523 and generally receives discharge after completing plan payments (11 U.S.C. § 1141). Chapter 12 generally grants a discharge after plan payments and any required domestic-support certification, except for the debts identified in § 1228 (11 U.S.C. § 1228). A completed Chapter 13 plan follows the narrower exception list written into § 1328(a). A Chapter 13 hardship discharge follows § 1328(c), which excepts debts of a kind specified in § 523(a) (11 U.S.C. §§ 523 and 1328).

How does Chapter 13 treat divorce-related debts?

Chapter 13 does not treat every divorce-related debt the same way. Section 523(a)(15) covers certain debts to a spouse, former spouse or child that arise from a divorce, separation agreement, divorce decree or related determination and are not domestic support obligations (11 U.S.C. § 523). That category is often described as including property-settlement obligations, but its treatment depends on which Chapter 13 discharge provision applies. The exception list for a discharge after completion of all plan payments under § 1328(a) includes § 523(a)(5), which concerns domestic support obligations, but does not include § 523(a)(15) (11 U.S.C. § 1328). By contrast, a hardship discharge entered before completion of all payments under § 1328(b) is governed by § 1328(c), which excepts debts of a kind specified throughout § 523(a), including paragraph (15). The statutory distinction means it is inaccurate to describe every property-settlement debt as categorically nondischargeable in every Chapter 13 discharge.

Do bankruptcy chapters or filing costs change by state?

The chapters are federal and do not change from one state to another. Bankruptcy cases are filed in federal bankruptcy court, and they cannot be filed in state court (Bankr. D. Md. official page — Legal Overview). State law can still affect parts of a case, especially the exemptions available for property. Official instructions warn that an individual must understand any applicable state exemption laws (Bankr. E.D. La. official guidance — Chapter 13 Form Packet). State and household information also matters when the Chapter 7 income forms compare current monthly income with the applicable median (Bankr. S.D. Iowa official guidance — Instructions - Bankruptcy Forms for Individuals). The basic Chapter 7 filing charge consists of a $245 statutory filing fee, a $78 administrative fee and a $15 trustee surcharge. Chapter 13 has a $235 statutory filing fee and a $78 administrative fee. These national charges are separate from attorney fees, course charges or fees for later filings.

What do people commonly misunderstand about bankruptcy chapters?

Chapter numbers are categories, not a scale of how serious a financial problem is. A higher number does not mean a worse case or a stronger discharge. Another common mistake is assuming that every chapter discharges the same debts. Chapter 7, Chapter 11, Chapter 12 and Chapter 13 have different discharge provisions, and even the completed-plan and hardship discharges within Chapter 13 use different exception rules (11 U.S.C. §§ 727, 1141, 1228 and 1328). A discharge also concerns personal liability for covered debts; it does not necessarily eliminate a valid lien against property (11 U.S.C. § 524; U.S. Bankr. Ct. M.D. Ala., Consumer Pro Se Debtors Guide). Finally, dismissal is not discharge. When a case is dismissed, the automatic stay ends and collection may resume on debts that were not discharged, while the dismissal order itself releases no debt (U.S. Bankr. Ct. M.D. Ala., Consumer Pro Se Debtors Guide). These distinctions matter more than the chapter number alone.

Frequently asked questions

How many bankruptcy chapters can an individual file under?

Four chapters are described as available to individuals who meet the applicable requirements: Chapter 7, Chapter 11, Chapter 12 and Chapter 13. The required consumer notice identifies them as liquidation, reorganization, a plan for family farmers or fishermen, and a plan for individuals with regular income, respectively (11 U.S.C. § 342; Bankr. E.D. La. official guidance — Chapter 7 Form Packet).

What is the difference between Chapter 7, Chapter 11 and Chapter 13?

Chapter 7 is liquidation, Chapter 11 is reorganization through a plan, and Chapter 13 is a plan for individuals with regular income. Chapter 7 may involve the sale of non-exempt property, Chapter 11 ordinarily connects discharge to plan confirmation subject to important exceptions, and Chapter 13 generally connects a completed-plan discharge to completion of the required payments (11 U.S.C. §§ 1141 and 1328).

Can a corporation, partnership or LLC receive a bankruptcy discharge?

A qualifying business entity may ordinarily receive a Chapter 11 discharge through confirmation of a plan, subject to the plan, confirmation order and statutory exceptions (11 U.S.C. § 1141). A non-individual debtor cannot receive a Chapter 7 discharge, and Chapter 13 is limited to individuals (11 U.S.C. §§ 109 and 727).

Are property-settlement debts discharged in Chapter 13?

Their treatment depends on the type of Chapter 13 discharge. Section 523(a)(15) covers certain non-support divorce or separation debts, but paragraph (15) is not included in the exception list for a completed-plan discharge under § 1328(a). A hardship discharge under § 1328(c) excepts debts of a kind specified throughout § 523(a), including paragraph (15) (11 U.S.C. §§ 523 and 1328).

Does filing under any consumer chapter affect collection activity?

Filing a bankruptcy petition generally triggers the automatic stay against covered collection activity (11 U.S.C. § 362; Bankr. D. Md. official page — Legal Overview). The stay has statutory exceptions, and a creditor may ask the court for relief from it. Chapters 12 and 13 also contain separate stays addressing certain collection from an individual codebtor on consumer debt (11 U.S.C. §§ 1201 and 1301).

Is Chapter 12 relevant to every consumer?

No. Chapter 12 is a voluntary repayment plan specifically for qualifying family farmers or fishermen, rather than a general repayment chapter for all individuals (11 U.S.C. § 342; Bankr. E.D. La. official guidance — Chapter 7 Form Packet). It also has its own discharge and consumer-codebtor-stay provisions (11 U.S.C. §§ 1201 and 1228).

Which bankruptcy chapter should I file under?

That choice depends on facts this explainer cannot evaluate, including the nature of your debts, income, property and goals. The official consumer notice says an attorney should review both the decision to file and the choice of chapter (Bankr. E.D. La. official guidance — Chapter 7 Form Packet). Bankruptcy.law provides information and does not make that decision or provide legal advice.

Sources

• 11 U.S.C. § 101 — Definitions · official source
• 11 U.S.C. § 103 — Applicability of chapters
• 11 U.S.C. § 109 — Who may be a debtor · official source
• 11 U.S.C. § 342 — Notice · official source
• 11 U.S.C. § 362 — Automatic stay · official source
• 11 U.S.C. § 523 — Exceptions to discharge · official source
• 11 U.S.C. § 524 — Effect of discharge · official source
• 11 U.S.C. § 727 — Chapter 7 discharge · official source
• 11 U.S.C. § 1141 — Effect of Chapter 11 confirmation
• 11 U.S.C. § 1228 — Chapter 12 discharge
• 11 U.S.C. § 1328 — Chapter 13 discharge · official source
• 11 U.S.C. § 1201 — Stay of action against codebtor in Chapter 12
• 11 U.S.C. § 1301 — Stay of action against codebtor in Chapter 13 · official source
• 28 U.S.C. § 1930(a)(1)(A), (f)(1) — Chapter 7 filing fee · official source
• 28 U.S.C. § 1930(a)(1)(B) — Chapter 13 filing fee · official source
• Bankruptcy Court Miscellaneous Fee Schedule, Item 8 — Administrative fee
• Bankruptcy Court Miscellaneous Fee Schedule, Item 9 — Chapter 7 trustee surcharge
• Bankr. E.D. La. official guidance — Chapter 7 Form Packet
• Bankr. E.D. La. official guidance — Chapter 13 Form Packet
• Bankr. D. Md. official page — Legal Overview
• Bankr. S.D. Iowa official guidance — Instructions - Bankruptcy Forms for Individuals
• U.S. Bankr. Ct. D. Ariz., Choosing Your Chapter: What can Bankruptcy do for you? What will it do to you?
• U.S. Bankr. Ct. M.D. Ala., Consumer Pro Se Debtors Guide

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