Types of Bankruptcy; General Procedures
There are two basic types of bankruptcy proceedings: liquidation and reorganization. Liquidation, as its name suggests, liquidates the non-exempt assets of the debtor which are then used to pay off his creditors. Reorganization, on the other hand, economically rehabilitates the debtor by enabling him to recognize existing debts and structure new payout agreements with creditors. Chapters 1, 3, and 5 of The Code provide general information that applies to all bankruptcy cases and deal with procedural aspects of same. Chapters 7, 11, 12, and 13 are considered special chapters that affect only cases begun and administered under their provisions. A review of the Petition for Bankruptcy or case docket will disclose the applicable Chapter of a particular bankruptcy case. In some cases, proceedings begun under one Chapter may later be converted to another Chapter.
Automatic Stays