Chapter 7 is the U.S. Bankruptcy Code's liquidation chapter, which is sometimes referred to as a "straight bankruptcy." It is used by businesses wishing to liquidate and terminate their business, and by individuals who want to free themselves of debt simply and inexpensively.

Chapter 7 involves the bankruptcy trustee gathering the debtor's non-exempt assets. An individual debtor is permitted to retain certain exempt property, while a trustee liquidates the debtor's remaining assets and proceeds from the sale are distributed according to priorities set by the Bankruptcy Code.

Relief in a Chapter 9 is only available to a municipality that is defined in the U.S. Bankruptcy Code as a "political subdivision or public agency or instrumentality of a State." A municipality is eligible to file a Chapter 9 bankruptcy if it (1) is authorized under state law to file bankruptcy, (2) is insolvent, (3) desires to effect a plan to adjust its debts, and (4) establishes specific efforts made to negotiate with its creditors.

Under Chapter 9, municipal-debtors retain most of their authority, in contrast to corporate bankruptcies, where judges and creditors have more power to determine corporate actions. The largest municipal bankruptcy in U.S. history was filed in 1994 in Orange County, California. The bankruptcy was filed after the county's $8 billion investment pool bet heavily on falling interest rates. The County incurred losses of $1.64 billion when rates went in the opposite direction. The firm successfully represented four of the largest school districts in Orange County, California, to ensure the recovery of funds in the County's investment pool.

Chapter 11 of the U.S. Bankruptcy Code is frequently referred to as "reorganization." Although an individual may file under Chapter 11, generally it is used to reorganize a business. Individuals with large federal or state tax obligations may use Chapter 11 because an extended period of time may be obtained for the repayment of the taxes.

Chapter 11 generally allows the debtor to continue its business operations as it proceeds to the desired goal of a confirmed Plan of Reorganization, which must meet certain statutory criteria. A major rationale for business reorganizations is that the value of a business as an ongoing concern is greater than it would be if its assets were liquidated and sold. Generally, it is more economically efficient in the long run to reorganize than to liquidate, because reorganization preserves jobs and assets. Cooperation amongst the various creditor and equity interests, however, is crucial to a successful reorganization.

Congress enacted Chapter 12 of the U.S. Bankruptcy Code in 1986, specifically to meet the needs of financially distressed family farmers. It is more streamlined and less expensive than Chapter 11, which is more suited to a large corporate reorganization. In addition, few family farmers found Chapter 13 to be more beneficial, as it was designed for wage earners who had substantially smaller debts than those facing family farmers.

The Bankruptcy code provides that only a family farmer whose annual income is sufficiently stable and regular may be able to make payments under a Chapter 12 plan may be a debtor who can file a petition for relief under Chapter 12. Chapter 12 does make allowances for income that is seasonal in nature. Relief under this chapter is voluntary; thus, only the debtor may file a petition under Chapter 12.

Chapter 13 is frequently referred to as a "wage earner" chapter, although its benefits and protection are available to individuals with any form of regular income. Chapter 13 lets you rearrange your financial affairs, repay a portion of your debts and put yourself back on your financial feet. Debts are repaid through a "Chapter 13 plan." Under a typical plan, monthly payments are made to a bankruptcy trustee who is appointed by the bankruptcy court. The trustee distributes your money to your creditors.

Creditors are repaid in full or in part, in installments generally over a three-year period, during which time creditors are prohibited from starting or continuing collection efforts. Any individual is eligible for Chapter 13 relief as long as the individual's unsecured debts are less than $269,250 and secured debts are less than $807,750.