An Overview on Bankruptcy Law

Understanding the essentials and positioning yourself for growth

Bankruptcy is more than a way to get out of debt; it is a legal tool that has helped countless families and businesses reorganize and rebuild in the wake of serious financial hardship. Choosing to consider bankruptcy for yourself, your family or your business can be a stressful decision, but the process of gathering the information and help you need doesn’t have to be.

Understanding how best to use this legal capability to position yourself or your business for growth at the end of the process is critical. Whether that is knowing which chapter you should file, or what kinds of debts you can and cannot eliminate, the information on this page is designed to help you get started with the essentials and consider whether the next step is to talk with an attorney.


Bankruptcy is a process that helps individuals and businesses find relief from debt. There are different kinds of bankruptcy, and not all are available in all circumstances. These different kinds of bankruptcy can also handle debt differently, removing the debt entirely in some cases or allowing for a restructured payment plan in others. Which type of bankruptcy you might file under can be influenced by a lot of factors, such as whether you are a person or a business, whether you have reasonable means to pay back your debt or not, and the amount of debt you might be facing.

Chapter 7 Bankruptcy

Chapter 7 is the most common form of bankruptcy in the United States. Under this chapter, both individuals and business can sell their assets to pay their creditors. You have probably heard this type of bankruptcy referred to generally as “liquidation.” There is some property that is exempt from liquidation.

Chapter 7 bankruptcy can discharge credit card debt, medical bills and personal loans, but will not discharge taxes, student loans, or child support and spousal maintenance.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is an alternative to Chapter 7 that is most commonly used by businesses. Individuals typically only file for Chapter 11 when they don’t want to liquidate all their assets but don’t meet the debt requirements of Chapter 13.  

Chapter 11 allows business debtors to remain in business and adjust their debt. This type of bankruptcy is often referred to as “restructuring.” Businesses may file for Chapter 11 bankruptcy voluntarily, or creditors may file a petition with the bankruptcy court to force Chapter 11 on a business. The business will create a repayment plan that will allow it to pay their bills over time.

Chapter 11 bankruptcy may also affect corporate partnerships and stakeholders.

Chapter 12 Bankruptcy

Chapter 12 bankruptcy allows family farmers or family fishers to create and carry out a plan to repay their debts, much like Chapter 11. Qualifying debtors will be given a specific amount of time to complete their payment plan—usually five years, but allowances are often made because farming and fishing are seasonal in nature. Chapter 12 bankruptcy applies to a specific group of debtors, and the bankruptcy courts have a strict definition of who qualifies.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is an alternative to Chapter 7 that is available to individuals. Sole business proprietors may also be eligible for Chapter 13 in some cases. Chapter 13 allows debtors to create a repayment plan under which they will repay all or part of their debts over a period of time—usually three to five years.

Filing a Chapter 13 petition automatically stops most collection actions, which is called a “stay”, but this does not apply to all collection actions. To qualify for Chapter 13 bankruptcy, a debtor must meet specific income and debt requirements.

Common Questions

Below are some common questions you might want to consider when meeting with an attorney.

  1. Should I file for bankruptcy?
  2. What happens when I file for bankruptcy?
  3. Will I lose my property if I file for bankruptcy?
  4. What do the “chapters” mean?
  5. What chapter is appropriate for my situation?
  6. How does bankruptcy affect my credit rating?
  7.  Are there debts that can’t be discharged in bankruptcy?

Finding the Right Attorney for Your Needs

It is important to approach the right type of attorney so that you can make sure you hire someone who can help you through your entire case. To do this, visit the Super Lawyers directory and use the search box to find a lawyer based on your legal issue or location.

You may want to consider looking for an attorney who specializes in Bankruptcy Law. You may also want to consider a Credit Repair attorney.

How Much Will It Cost?

From chapter to chapter, state to state, and case to case, bankruptcies vary in cost. It is advisable to speak with multiple attorneys before you decide which to hire, and all of them should give an estimate of the cost in that initial meeting.

“Generally, in Nevada, a Chapter 7 ranges from $2,000 to $3,000," says Nedda Ghandi, an attorney at Ghandi Deeter Blackham in Las Vegas. "A Chapter 13 is a little bit less out of the gate—meaning you pay less upfront, between $1,000 and $2,000. But the overall cost is between $5,000 and $7,000 over the course of five years”

Why Should I Talk to a Lawyer?

Each chapter of bankruptcy has specific requirements that must be met, including income and debt requirements, filing requirements and evidence requirements. Because each bankruptcy chapter protects you and your assets differently, it will be important to make sure you file under the chapter that best fits your situation.

A lawyer will be able to anticipate potential problems with your case and advise you on how to approach them. Your lawyer will also keep track of deadlines and file all the paperwork with the necessary courts and agencies, giving you one less thing to worry about.

Why Super Lawyers?

Super Lawyers is a rating service of outstanding lawyers from more than 70 practice areas who have attained a high degree of peer recognition and professional achievement. The patented selection process includes independent research, peer nominations and peer evaluations. The objective is to create a credible, comprehensive and diverse listing of outstanding attorneys that can be used as a resource for attorneys and consumers searching for legal counsel. As Super Lawyers is intended to be used as an aid in selecting a lawyer, we limit the lawyer ratings to those who can be hired and retained by the public. You can learn more about the selection process here.

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