when you file chapter 7 bankruptcy you essentially sell off your assets to clear debt people who have no valuable assets and only exempt property such as household goods clothing tools for their trades and a personal vehicle worth up to a certain value may end up repaying no part of their unsecured debt 3
businesses often file for chapter 11 bankruptcy with the goal of reorganizing and remaining in business filing chapter 11 bankruptcy gives a company the opportunity to create plans for profitability cut costs and find new ways to increase revenue its preferred stockholders if any may still receive payments though common stockholders will be last in line 4for example a housekeeping business filing chapter 11 bankruptcy might increase its rates slightly and offer more services to become profitable chapter 11 bankruptcy allows the business to continue conducting its business activities without interruption while working on a debt repayment plan under the court s supervision in rare cases individuals can also file for chapter 11 bankruptcy 5individuals who make too much money to qualify for chapter 7 bankruptcy may file under chapter 13 also known as a wage earner s plan it allows individuals as well as businesses with consistent income to create workable debt repayment plans the repayment plans are commonly in installments over the course of a three to five year period in exchange for repaying their creditors these debtors are allowed per the courts to keep all of their property including otherwise nonexempt property 6while chapter 7 chapter 11 and chapter 13 are the most common bankruptcy proceedings there are several other types being discharged from bankruptcy