Types of Bankruptcy. There are five different kinds of bankruptcy and they are all known as different "chapters" of bankruptcy.
Type Common names Available to:
Chapter 7 Fresh Start, also Liquidation Almost all persons and companies
Chapter 9 Governmental Reorganization Cities, counties, states
Chapter 11 Business Reorganization Persons and corporations
Chapter 12 Farmers Reorganization Farmers
Chapter 13 Personal Reorganization Persons & "Mom & Pop" Businesses, not corporations
Federal or State law? Bankruptcy is federal law and so all U.S. Bankruptcy Courts use the same Bankruptcy Code. However, to make things a little confusing, bankruptcy law uses state laws to determine many of the rights of parties in the bankruptcy court, for example, who holds the first or second lien on the same piece of property. Furthermore, the items of property you are entitled to keep (called your exempt property) often (but not always) varies from state to state. For this reason, you should usually consult a bankruptcy lawyer who practices law in your own state.

Filing the Petition. A bankruptcy case is started by "filing" (delivering to the bankruptcy court) a document called a "Petition." In Florida bankruptcy practice, at least, bankruptcy courts are assigned by county, see chart of Florida cities and counties. The person filing the petition is called a "debtor" (we don't call them the "bankrupts" anymore). The people to whom the debtor owes money are called "creditors." The Petition is accompanied by voluminous material called the "Schedules and Statement of Affairs" all of which is aimed at producing a very accurate and detailed photograph of the debtor's financial position at the time the Petition is filed.

Automatic stay. A key feature of bankruptcy is the "automatic stay" which is essentially an instant wet blanket thrown over all the debtor's creditors. Creditors are forbidden from continuing with collection efforts or bothering the debtor in any way about money owed unless and until they get special permission from the bankruptcy court. This gives the debtor a little breathing room. Lawsuits all over the U.S. against the debtor come to a screeching halt. It's really an awesome display of the power of federal law.

The Trustee. In some kinds of bankruptcy the Court appoints someone called the Trustee. The duties of the trustee vary according to the kind of bankruptcy filed, but in a Chapter 7 personal bankruptcy, for example, the Trustee functions much like a Personal Representative or Executor in a probate proceeding, gathering up assets for the benefit of the creditors.

Creditors meeting. The creditors have a right to ask questions of the debtor about the debtor's assets and financial dealings. This takes place at the Meeting of Creditors, usually about one month after the Petition is filed. There is no judge at the creditor's meeting; instead a Trustee runs the meeting usually asking questions and then permitting creditors to do so.

Process from here. After the creditors' meeting the bankruptcy process forks into different directions, depending on the kind of bankruptcy filed. See Chapter 7, 11, and 13, for more information.

Note: Take care when you search the web under "Bankruptcy law." It is sometimes misspelled "bankruptsy law" or "bankrupcty law."
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