Most people only ever deal with two bankruptcy chapters: Chapter 7 (which sells off non-exempt property and wipes out qualifying debts in a few months) and Chapter 13 (which sets up a 3-to-5-year repayment plan, often to save a house or car from repossession). Two other chapters exist mainly for businesses and a narrow slice of individuals — Chapter 11 (reorganization, mostly for companies but occasionally used by high-debt individuals) and Chapter 12 (built specifically for family farmers and commercial fishermen). All of them live in the same federal law, the U.S. Bankruptcy Code (Title 11 of the U.S. Code), and all of them are administered through the federal bankruptcy courts described at uscourts.gov's Bankruptcy Basics pages.
The "chapter" a case is filed under just refers to the chapter number in the Bankruptcy Code that sets its rules. Nothing about needing bankruptcy help says anything about your character — job loss, medical bills, divorce, and small-business setbacks put ordinary, responsible people into every one of these chapters every year. This article is a map of the four chapters an ordinary person is likely to hear about, so you can walk into a conversation with a bankruptcy attorney or a credit counselor already knowing the basic shape of your options.
The two chapters most individuals actually use
Chapter 7: liquidation, the "fresh start" chapter
Chapter 7 is the chapter most people picture when they think "bankruptcy." A court-appointed trustee reviews what you own; property protected by an exemption (state or federal rules that shield a certain amount of home equity, a vehicle, retirement accounts, tools of your trade, and more) stays with you, and anything left over can be sold to pay creditors. In practice, most consumer Chapter 7 cases are "no-asset" cases — the filer's property is fully covered by exemptions, so nothing is actually taken. In exchange, qualifying unsecured debts (credit cards, medical bills, personal loans, and similar debts) are typically discharged — legally wiped out — a few months after filing. Exemption amounts are set by state law (or the federal exemptions where your state allows them) and are adjusted periodically, so confirm the current figures in your own state's exemption statutes before you count on any specific amount.
To use Chapter 7 you have to pass the "means test," which compares your income to your state's median income and, if you're above it, looks at your allowed expenses to see whether you have room to fund a repayment plan instead. The specific income figures used in the means test are updated roughly twice a year by the Department of Justice's U.S. Trustee Program — do not rely on a number you saw somewhere else; check the current data at justice.gov/ust.
Chapter 13 is built for people with steady income who owe more than they can pay right now but want to keep specific property — most often a house facing foreclosure or a car facing repossession — rather than risk losing it in a Chapter 7 sale. You propose a plan to pay some or all of your debts over three to five years, and as long as you keep up the payments, the automatic stay keeps creditors off your back the whole time. Chapter 13 can let you catch up on missed mortgage payments over the life of the plan, and in some situations reduce ("cram down") what you owe on certain other secured debts. When the plan is completed, remaining eligible debts are discharged.
Chapter 13 is only open to individuals whose secured and unsecured debts fall under limits set by Congress — and those limits have changed more than once in recent years, including a temporary increase that expired and reverted to lower amounts. Do not assume a dollar figure you've seen is still current; confirm the live eligibility limits at uscourts.gov's Chapter 13 Bankruptcy Basics page.
For the full mechanics of the repayment plan, the mortgage-and-car protections, and what happens if you fall behind on plan payments, see our Chapter 13 bankruptcy pillar guide.
Chapter 11 lets a debtor keep operating while working out a court-approved plan to reorganize its finances and pay creditors over time, instead of shutting down and liquidating. It's most associated with corporations and partnerships restructuring debt, but individuals can file Chapter 11 too — typically when their debts or income are too large to fit inside Chapter 13's eligibility limits, or when a small-business owner's personal and business finances are tangled together. Chapter 11 cases are generally more complex, slower, and more expensive than Chapter 7 or 13, with more court oversight and creditor involvement.
A faster, cheaper track called Subchapter V was added to Chapter 11 for eligible small-business debtors (including some individuals whose debt is mostly business-related), with shorter deadlines and a more streamlined plan process. Eligibility depends on a qualifying-debt ceiling that has been adjusted more than once — a temporary increase expired and reverted to a lower amount, and the figure is also periodically adjusted for inflation — so check current eligibility at the U.S. Trustee's Subchapter V page or uscourts.gov's Chapter 11 Bankruptcy Basics page. If your situation might call for Chapter 11, that's a case where hiring an experienced bankruptcy attorney isn't optional — the stakes and the paperwork are both much higher than a typical consumer filing.
Chapter 12: for family farmers and family fishermen
Chapter 12 is a narrow, purpose-built chapter for people whose income comes mainly from a family farming or commercial fishing operation. It works much like Chapter 13 — a repayment plan over three to five years, funded by future income — but with rules tailored to farm and fishing income (which can swing seasonally or with a single harvest or catch) and with eligibility debt ceilings set separately for farmers and fishermen. Congress created it because Chapter 11 was too costly and slow, and Chapter 13's debt limits and rules didn't fit many farm and fishing operations. If this describes your situation, see uscourts.gov's Chapter 12 Bankruptcy Basics page and talk to an attorney experienced in agricultural or fishing-industry bankruptcy — it's a genuinely different practice area from consumer Chapter 7 or 13 work.
What to do: figuring out which chapter fits you
Start with the two-chapter question. For almost every individual with primarily personal (non-business) debt, the real decision is Chapter 7 vs. Chapter 13 — not whether Chapter 11 or 12 applies. Those two are edge cases: Chapter 11 for high-debt individuals or small-business owners above Chapter 13's limits, Chapter 12 only for family farmers and fishermen.
Take stock of what you own and what you're behind on. If you're not at risk of losing a house or car to foreclosure or repossession and your income is modest, Chapter 7 is often the faster, cheaper route. If you're trying to save a home or vehicle, or your income is too high to pass the means test, Chapter 13 is usually the path.
Get the current numbers before you file anything. Income limits for the means test, property-exemption amounts, court filing fees, and Chapter 13/Subchapter V debt ceilings all change periodically. Confirm the current figures at uscourts.gov, justice.gov/ust, and your own state's exemption statutes rather than relying on any number you read elsewhere — including this article.
Complete the required credit-counseling course before you file. Every individual bankruptcy filer, in any chapter, generally must get a briefing from a U.S. Trustee-approved credit-counseling agency within a set window before filing, and a second debtor-education course before discharge. Skipping either can cost you your case or your discharge — see the approved-agency list at justice.gov/ust.
Talk to a real bankruptcy attorney — especially if a house, a business, significant assets, or a debt you're worried won't be dischargeable (like certain taxes or student loans) is involved. Low-cost help exists: legal aid offices, law-school bankruptcy clinics, and your local bankruptcy court's self-help resources listed at uscourts.gov.
Watch out for scams while you're researching this
Companies advertising "debt settlement" or "debt relief" — as opposed to bankruptcy — are not bankruptcy filings and don't get you the automatic stay or a legal discharge; some charge large upfront fees and leave people worse off, and the FTC and CFPB both warn about them. Also watch for non-attorney "petition preparers" who offer legal advice about which chapter to file or how to fill out your schedules — by law they can only type up documents you direct them to prepare, and advice beyond that is illegal for them to give and can hurt your case. Use a licensed bankruptcy attorney or a genuinely U.S. Trustee-approved credit-counseling agency, not a company you saw in an ad promising to "settle your debt for pennies on the dollar."
Key takeaways
Chapter 7 liquidates non-exempt property (little or none, for most filers) and discharges qualifying debt in a few months.
Chapter 13 sets up a 3-to-5-year repayment plan, often to save a home or car, with discharge at the end.
Chapter 11 is reorganization, used mostly by businesses but occasionally by individuals above Chapter 13's debt limits.
Chapter 12 is a specialized repayment-plan chapter just for family farmers and commercial fishermen.
Never rely on a specific dollar figure for exemptions, income limits, fees, or debt ceilings without checking the current number at uscourts.gov or justice.gov/ust.
This article is general legal information, not legal advice, and reading it doesn't create an attorney-client relationship. Beware of for-profit debt-settlement and debt-relief companies and non-attorney "petition preparers" — for an actual bankruptcy filing, work with a licensed bankruptcy attorney or a U.S. Trustee-approved credit-counseling agency.
Frequently asked questions
What's the main difference between Chapter 7 and Chapter 13?
Chapter 7 sells off any non-exempt property (usually none, for most filers) and discharges qualifying debts in a few months. Chapter 13 keeps you in a 3-to-5-year repayment plan, which is usually chosen to catch up on a mortgage or car loan and keep the property.
Can an individual file Chapter 11 instead of Chapter 7 or 13?
Yes, though it's uncommon. Individuals sometimes use Chapter 11 when their debts exceed Chapter 13's eligibility limits or when their personal and business finances are too intertwined for a simple consumer filing. It is generally slower and more expensive than Chapter 7 or 13.
Who can use Chapter 12 bankruptcy?
Chapter 12 is limited to family farmers and family fishermen who meet specific income and debt-composition requirements tied to their farming or commercial fishing operation. It functions like a repayment plan similar to Chapter 13 but with rules suited to farm and fishing income.
How do I know which chapter I qualify for?
For most individuals it comes down to the Chapter 7 means test (comparing your income to your state's median) and whether you're trying to save specific property like a home. The current means-test data and eligibility limits are published at justice.gov/ust and uscourts.gov, and a bankruptcy attorney can review your numbers with you.
Is a debt-settlement company the same as filing bankruptcy?
No. Debt-settlement or debt-relief companies are not bankruptcy and don't give you the automatic stay or a legal discharge; some charge large upfront fees. If you're considering bankruptcy, work with a licensed bankruptcy attorney or a U.S. Trustee-approved credit-counseling agency instead.
This article is general legal information, not legal advice, and may not reflect the most current law or the law in your jurisdiction. Laws vary by state and change over time. For advice about your specific situation, consult a licensed attorney.
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