Chapter 7 is known as “liquidation” or “straight” bankruptcy. It is for individuals and businesses. The goal for individuals is to ”discharge” their debts and get a ”fresh start.” The goal for a businesses is to provide an orderly process to close-down operations. Businesses do not receive (nor need) a discharge. It is quick compared to other bankruptcies (a normal case is about 4 months from start to finish).
Chapters 11 is for business reorganization; the goal is for the debtor/business (known as a ”Debtor in Possession” or “DIP”) to reorganize itself and continue to operate. The DIP will seek “confirmation” (court approval) of a plan. An individual can also file for Chapter 11 (e.g., they don’t qualify for Chapter 13 relief) but it is more expensive and more complex.
Chapter 13 is for individual (“consumer”) and small business reorganization. It is also known as ”wage earner” bankruptcy because the debtor must have a sufficient income to fund a plan. Eligibility depends on the amount of debts and the debtor’s income. Like in Chapter 11, the debtor will seek “confirmation” of a repayment plan lasting between 36 and 60 months. At completion, the debtor will obtain a “discharge” of pre-petition debts.