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There are several types of bankruptcy, but there are two types that are available to the typical individual or couple.
Chapter 7 bankruptcy is preferable for people who do not want to be "locked down" to a stringent budget for up to five years, or who don't have a consistent income stream that is sufficent to pay all monthly bills as they come due. Chapter 7 is a "liquidation" procedure, which actually works best for most people. The typical timeline for Chapter 7 is only 90 days start to finish.
Chapter 11 is a term that many people have heard of on the news or in the media. It seems like almost every year, one or more of the airlines files a Chapter 11 case.
The purpose of Chapter 11 is to reorganize complicated finances, typically for a corporation. While it is true that some individuals file under Chapter 11, it is normally because they are trying to restructure their finances and they are over the limit (have too much debt) for the consumer reorganization provisions of Chapter 13.
Chapter 13 bankruptcy is a "debt repayment plan" that is designed to allow people to "catch up" on missed house or car payments by making up the missed payments over a period of time.
It works well for people with regular income and who can pay their normal expenses but have missed house payments due to a temporary interruption in income, such as an illness, a period of unemployment, or other temporary circumstance.
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