Which chapter of bankruptcy is the most common?

Which chapter of bankruptcy is the most common?

• A. Chapter 11
• B. Chapter 7
• C. Chapter 13
• D. Chapter 9

Answer: (B)

When people seek relief from consumer debt, the most common option is Chapter 7 because it offers a fast, straightforward way to discharge unsecured debts without a long repayment plan. The process typically wraps up in a few months, and many filers have little or no nonexempt assets, so there’s little liquidation needed. If you qualify through the means test, you can file and receive a discharge that provides a fresh start relatively quickly. If your situation involves a regular income and you want to keep certain assets or owe a lot of debt you can repay over time, Chapter 13 becomes an option, which sets up a three- to five-year repayment plan. Chapter 11 is aimed at reorganizing debts for businesses (and sometimes individuals with complex financials), not primarily for quick personal relief, and Chapter 9 is designed for municipalities. That combination is why Chapter 7 is the most common for typical consumer bankruptcies.

When people seek relief from consumer debt, the most common option is Chapter 7 because it offers a fast, straightforward way to discharge unsecured debts without a long repayment plan. The process typically wraps up in a few months, and many filers have little or no nonexempt assets, so there’s little liquidation needed. If you qualify through the means test, you can file and receive a discharge that provides a fresh start relatively quickly.

If your situation involves a regular income and you want to keep certain assets or owe a lot of debt you can repay over time, Chapter 13 becomes an option, which sets up a three- to five-year repayment plan. Chapter 11 is aimed at reorganizing debts for businesses (and sometimes individuals with complex financials), not primarily for quick personal relief, and Chapter 9 is designed for municipalities. That combination is why Chapter 7 is the most common for typical consumer bankruptcies.