A graduate of New York University School of Law, Nancy L. Kourland practices at Rosen & Associates, PC, in New York. Nancy L. Kourland has largely focused her career on bankruptcy litigation, and she often represents banks, debtors, and distressed companies dealing with Chapter 11 bankruptcy.
In the United States, there are several types of bankruptcy, including Chapter 7 and Chapter 11. These may seem somewhat similar, but there are actually significant differences between them. Both can be filed by individuals, businesses, or married couples, but the average person tends to use Chapter 7, while businesses often use Chapter 11.
Chapter 7 is also called liquidation bankruptcy. The debtor does not have any additional obligation to most debts by the end of the process. However, it will typically not eliminate mortgages or car loans, school loans, child support, or tax debts, though there are some exceptions. During the legal process for this type, a trustee is given the responsibility of securing any assets and selling those that are not exempt.
When it comes to Chapter 11 bankruptcy, a debtor’s assets are not sold, nor is any of the debt wiped out. Sometimes called rehabilitation or reorganization bankruptcy, this type is often more involved than Chapter 7, resulting in debts being restructured so that a company or individual can stay afloat while paying back any loans. While a trustee is also assigned during Chapter 11 processes, the trustee simply helps debtors create a manageable repayment plan instead of selling their assets.