You  have a choice in deciding WHICH chapter of the Bankruptcy Code will  best suit your needs.  UNDER THE BANKRUPTCY LAWS, THERE ARE CHAPTERS 7,  11, 12, AND 13 WHICH ARE DISCUSSED BELOW. Even if you have already filed  for relief under ONE Chapter, you may be eligible to convert your case  to a different chapter.

Chapter 7 

The  liquidation chapter of the Bankruptcy code. Under Chapter 7, a trustee  is appointed to collect and sell, if economically feasible, all property  that is not exempt from these actions.

Chapter 11 

The  reorganization chapter most commonly used businesses, but it is also  available to individuals. Creditors vote on whether to accept or reject a  plan, which also must be approved by the court. While the debtor  normally remains in control of the assets, the court can order the  appointment of a trustee to take possession and control of the business.

Chapter 12

Offers  bankruptcy relief to those who qualify as family farmers. Family  farmers must propose a plan to repay their creditors over a three-five  year period and it must be approved by the court. Plan payments are made  through a Chapter 12 Trustee, who also monitors the debtors farming  operations during the pendency of the plan.

Chapter 13 

​  Generally permits individuals to keep their property by repaying  creditors out of their future income. Each Chapter 13 debtor writes a  plan, which must be approved by the bankruptcy court. The debtor must  pay the Chapter 13 Trustee the amounts set forth in the plan. Debtors  receive a discharge after they complete their Chapter 13 repayment plan  which usually is either a 36 month plan or a 60 month plan, depending on  income and debt. Chapter 13 is only available to individuals with  regular income whose debts do not exceed $1,000,000 ($250,000 in  unsecured debts and $750,000 in secured debts).

There  are many other provisions of the Bankruptcy Code that may affect your  situation. This information sheet contains only general principles of  law and is not a substitute for legal advice. If you have questions or  need further information as to how the bankruptcy laws apply to your  specific case, you should consult with your lawyer.


The  filing of a Chapter 7 petition is designed to result in a discharge of  most of the debts you listed on your bankruptcy schedules. A discharge  is a court order that says you do not have to repay you debts, but there  are a number of exceptions. Debts which may not be discharged in your  Chapter 7 case include, for example, most taxes, child support, alimony,  and student loans; court-ordered fines and restitution; debts obtained  through fraud or deception; and personal injury debts caused by driving  while intoxicated or taking drugs. Your discharge may be denied entirely  if you, for example, destroy or conceal property, destroy, conceal, or  falsify records; or make a false oath. Creditors cannot ask you to pay  any debts which have been discharged. You can only receive a chapter 7  discharge every eight years.


The  fact that you filed bankruptcy can appear on your credit report for as  long as 10 years. Thus, filing a bankruptcy petition may affect your  ability to obtain credit in the future. Also, you may not be excused  from repaying any debts that were not listed in your bankruptcy  schedules or that you incurred after you filed for bankruptcy.


After  you file your petition, a creditor may ask you to reaffirm a certain  debt or you may seek to do so on your own. Reaffirming a debt means that  you sign and file with the court a legally enforceable document, which  states that you promise to repay all or a portion of the debt that may  otherwise have been discharged in your bankruptcy case, Reaffirmation  agreements must generally be filed with the court within 60 days after  the first meeting of the creditors.

Reaffirmation agreements are strictly voluntary. They are not required by the Bankruptcy Code or other  state or federal law. You can voluntarily repay any debt instead of  signing a reaffirmation agreement, but there may be valid reasons for  wanting to reaffirm a particular debt.

Reaffirmation  agreements must not impose an undue burden on you or your dependents  and must be in your best interest. IF you decide to sign a reaffirmation  agreement, you may cancel it any anytime before the court issues your  discharge order or within 60 days after the reaffirmation agreement was  filed with the court, whichever is later. If you reaffirm a debt and  fail to make the payments required in the reaffirmation agreement, the  creditor can take action against you to recover any property that was  given as security for the loan and you may remain personally liable for  any remaining debt.


Call RAMSEY H. MASHNI for a free consultation.

We are a debt relief agency. We help people file for bankruptcy relief under the bankruptcy code.