{"id":286958,"date":"2016-04-04T10:41:53","date_gmt":"2016-04-04T15:41:53","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/bankruptcy\/what-is-bankruptcy\/bankruptcy-definition-what-exactly-is-it.html"},"modified":"2026-07-27T09:44:17","modified_gmt":"2026-07-27T14:44:17","slug":"bankruptcy-definition-what-exactly-is-it","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/bankruptcy\/what-is-bankruptcy\/bankruptcy-definition-what-exactly-is-it.html","title":{"rendered":"What Are the Different Types of Bankruptcy?"},"content":{"rendered":"\n
\n

What Are the Different Types of Bankruptcy?<\/h1>\n\n
\n
\n By Lyle Therese A. Hilotin-Lee, J.D.<\/a> | Legally reviewed by Catherine Hodder, Esq.<\/a>\n | Last updated\n
\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
\n

This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\n
\n

The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n\n\n

\n
\n
\n

Key Takeaways<\/h2>\n

Bankruptcy is a legal process that allows individuals and businesses to eliminate or restructure<\/span> overwhelming debts under court protection. Governed by the U.S. Bankruptcy Code<\/span>, this financial tool offers distinct relief options categorized by different chapters. Chapter 7 and Chapter 13 serve as the primary paths for consumer debt discharge and asset preservation, while Chapter 11 focuses on corporate reorganization<\/span>.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n\n

There are six types of bankruptcy<\/span> under the U.S. Bankruptcy Code<\/span>, but most people only need to know about two. Chapter 7 eliminates most unsecured debts<\/span> in\u00a0three to six months, while Chapter 13 lets you keep your property while repaying debts over three to five years. Businesses typically use Chapter 11 to reorganize<\/span>. Chapters 9, 12, and 15 serve municipalities<\/span>, family farmers<\/span> and fishermen, and international cases, respectively.<\/p>\n

Each bankruptcy chapter serves a specific purpose and is available to different groups. Understanding these differences will help you determine which option, if any, suits your needs.<\/p>\n

If you are unsure where to start, a\u00a0bankruptcy attorney<\/span><\/a>\u00a0can evaluate your income, debts, and assets and help you understand your options.<\/p>\n

The Two Main Types for Individuals: Chapter 7 vs. Chapter 13<\/h2>\n

Most bankruptcy filings refer to Chapter 7 or Chapter 13, which together account for over 95% of consumer cases. Both are available to individuals and married couples, and both can discharge, or permanently eliminate, most unsecured debts<\/span> such as credit card<\/span> balances and medical bills<\/span>.<\/p>\n

The main differences come down to income, assets, and objectives.\u00a0<\/p>\n