The Bankruptcy Code appears in title 11 of the United States
Code, beginning at 11 U.S.C. 101. Its principal chapters
(7, 11, 12, 13 and 15) are briefly outlined below:
Chapter 7 bankruptcy is a
liquidation proceeding available to consumers and businesses.
Those assets of a debtor that are not exempt from creditors
are collected and liquidated (reduced to money), and the proceeds
are distributed to creditors. A consumer debtor receives a complete
discharge from debt under Chapter 7, except for certain debts
that are prohibited from discharge by the Bankruptcy Code.
Chapter 11 bankruptcy provides
a procedure by which an individual or a business can reorganize
its debts while continuing to operate. The vast majority of
Chapter 11 cases are filed by businesses. The debtor, often
with participation from creditors, creates a plan of reorganization
under which to repay part or all of its debts.
Chapter 12 allows a family
farmer or a fisherman to file for bankruptcy, reorganize its business
affairs, repay all or part of its debts, and continue
Chapter 13, often called wage-earner
bankruptcy, is used primarily by individual consumers to reorganize
their financial affairs under a repayment plan that must be
completed within three or five years. To be eligible for Chapter
13 relief, a consumer must have regular income and may not have
more than a certain amount of debt, as set forth in the Bankruptcy
Chapter 15 provides debtors, creditors, and other parties in interest involved in insolvency cases in foreign countries a mechanism by which they can assert their rights. Generally, a chapter 15 case is supplementary to a primary case or proceeding commenced in a debtor's home country. One of the primary goals of this chapter is to encourage cooperation and communication between the courts of the United States and parties in interest and foreign courts and parties in interest in cross-border cases.