There are six different types of bankruptcy (or chapters). Most people file for bankruptcy under Chapters 7, 11, or 13.

Chapter 7 allows a debtor to discharge their non-exempt assets (a home or car are often exempt from bankruptcy). A trustee appointed by the court sells the debtor's non-exempt assets and pays the proceeds to the creditors. Chapter 7 is available to individuals and businesses. While the Bankruptcy Code will allow the debtor to keep certain "exempt" property, the trustee will sell the debtor's remaining assets. Thus, the filing of a petition under chapter 7 may result in the loss of property.

Partnerships and corporations usually file Chapter 11 which provides for a reorganization of a business. An important benefit of Chapter 11 is that ability to continue operating a business while a payment plan is implemented and confirmed by the court.

Chapter 13 enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years.

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