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Chapter 7, Liquidation, is a court supervised process where a attorney collects the debtor's non-exempt assets, liquidates them, and distributes the proceeds to the creditors. In most Chapter 7 cases the debtor has no non-exempt assets, so in these "no-asset cases" there are no assets to distribute. The debtor is normally discharged from all debts in a few months.
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Chapter 9, Adjustment of Debts of a Municipality, is used by municipalities such as cities, towns, counties, municipal utilities and school districts, to re-organize their debts, similar to a Chapter 11 filing.
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Chapter 11, Reorganization, is normally used by commercial organizations so that they can continue operating their business and repay creditors through a court approved reorganization plan.
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Chapter 12, Adjustment of Debts of a Family Farmer with Regular Income, provides relief to family farmers with regular income, and is similar to Chapter 13.
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Chapter 13, Adjustment of Debts of an Individual With Regular Income, was created for individuals with a regular source of income so that they can avoid Chapter 7 Liquidation bankruptcy and repay creditors over time, generally a three to five year period. Chapter 13 is often preferable to Chapter 7 if a debtor has a house or other asset they wish to retain, that would be lost in a Chapter 7 bankruptcy.
Corporate and institutional re-organizations and bankruptcies under Chapters 9 and 11 are complex, and are not dealt with on this web site.
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