What different types of bankruptcy cases should I consider?

There are four types of bankruptcy cases provided under the law:

Chapter 7 is known as "straight" bankruptcy or "liquidation." It requires a debtor to give up property which exceeds certain limits called "exemptions," so the property can be sold to pay creditors.

Chapter 11, known as "reorganization," is used by businesses and a few individual debtors whose debts are very large.

Chapter 12 is reserved for family farmers and fishermen.

Chapter 13 is called "debt adjustment." It requires a debtor to file a plan to pay debts (or parts of debts) from current income.

Most people filing bankruptcy will want to file under either chapter 7 or chapter 13. Either type of case may be filed individually or by a married couple filing jointly.

If your income is above the median income for a family the size of your household in your state, you may have to file a chapter 13 case. A higher-income consumer must fill out "means test" forms requiring detailed information about income and expenses. If, under standards in the law, the consumer is found to have a certain amount left over that could be paid to unsecured creditors, the bankruptcy court may decide that the consumer can not file a chapter 7 case, unless there are special extenuating circumstances.

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