The term "bankruptcy" enconpasses several different legal methods of dealing with debt.  It is codified in a federal law: Chapter 11 of the US Code.  But the concept of a system to give someone relief from his or her debts has been around since the Old Testament.  A verse in Leviticus (one of the original five books of Moses) speaks of forgiving the debts of one's neighbors every seven years.  Additionally, our Constitution specifies that Congress shall enact uniform bankrutpcy laws. 

       Filing Bankruptcy is everyone's right under our laws.  It is nothing to be ashamed or frightened of, but provides an opportunity to end the suffering and stress of being over ridden by debt.  There are basically two types of bankruptcies:  liquidation and reorganization.  Liquidation generally refers to Chapter 7 bankruptcies - available for both individuals, married couples and businesses.  There are 3 general forms of reorganization: Chapters 11, 12 and 13.  Chapter 11 is available and appropriate for large businesses and individuals with considerable assets and debt.  Chapter 12 is used for family farmers or fishermen.  An Chapter 13 is the general form of consumer reorganization. 

The different kinds of Bankruptcy:

Chapter 7

Chapter 11

Chapter 12

Chapter 13

Bankruptcy Terms