Eligibility

• Individuals, business partnerships and corporations may file under Chapter 7 bankruptcy, also known as liquidation; however, a total discharge of debts under Chapter 7 is not available for partnerships or corporations. Chapter 7 filings are limited to those whose average six-month income is at or below the median income of the state they live in, and those above that income level but who pass a "means test."
  
  While individuals may file under Chapter 11, which is about debt reorganization, it is primarily meant as a means for a bankrupt business to continue operating. Chapter 13 pertains to individual debt adjustments and is primarily for individuals and the self-employed; incorporated businesses and partnerships are also ineligible. Under Chapter 13, as of May 2011, unsecured debts (such as credit cards) cannot be higher than $360,475 and secured debts (such as loans) cannot be higher than $1,081,400; individuals whose debts exceed these limits must file Chapter 11. Neither Chapter 11 nor 13 require a means test or have limits on personal income.
  
  

Mandatory Fees

• While attorney costs vary, the federal government mandates specific fees that must be paid when filing for bankruptcy. Under Chapter 7, as of May 2011, the fee is $299; this includes the $245 case filing fee, the $39 administrative fee and the $15 trustee surcharge. These payments can be made in installments. However, the court has the power to waive the fees. This is only possible if the debtor's income is calculated at less than 150 percent of the current poverty level, and there isn't enough money available to pay these fees in installments.
  
  For a Chapter 11 filing, the fees are $1,039, which breaks down to a $1,000 case filing fee and a $39 administrative fee. Chapter 13 filings require a $235 case fee and a $39 miscellaneous administrative fee for a total of $274. For all three bankruptcies, fees must be paid within four installments and 120 days, although the court may extend the deadline to 180 days.
  
  

Effects on Assets

• Chapter 7 bankruptcy entails the liquidation of assets; this means that all belongings considered to be "non-exempt" may be taken and sold to pay for debts. Non-exempt property includes but is not limited to purchases such as a second car or a vacation home. Chapter 11 and 13 allow for the protection of non-exempt assets in lieu of a plan to repay remaining debts.
  
  

Resolution of Debts

• Chapter 7 is designed to completely eliminate certain debts. There is no repayment schedule involved for any debts discharged under Chapter 7. Chapter 11 and 13 bankruptcies involve a re-negotiation (modification) of debts and a three to five year schedule by which payments will be made to resolve the remaining debts the courts declare are still valid. Chapter 7 bankruptcies have no affect tax debts, child support, student loans or financial liabilities from lawsuit judgements. Chapter 11 and Chapter 13 can result in a modification of tax debts, especially those that are over three years old.