What is the difference between chapters?

Chapter 7 is designed for individuals, corporations and partnerships in financial difficulty who do not have the ability to pay their existing debts. Under chapter 7, a trustee takes possession of all the debtor's non-exempt property, if any,  liquidates it for cash and uses the proceeds to pay creditors according to priorities of the Bankruptcy Code.

Chapter 11 allows a business to reorganize and restructure its finances so that it may continue to operate, provide employees with jobs, pay its creditors, and produce a return for its stockholders, if any. While chapter 11 is primarily designed for a business it is also available to individuals. In a chapter 11 case the debtor proposes a plan to creditors which, if accepted by the creditors and approved by the court, will allow a debtor to reorganize. A debtor may also propose a plan of liquidation and cease doing business.

Chapter 13 enables individuals with regular incomes, under court supervision and protection, to repay their debts over an extended period of time according to a plan. The plan may call for full or partial repayment.

Chapter 12 allows family farmers with financial difficulties to repay debts over a period of time from future earnings. In many ways it is similar to a chapter 13 case. The eligibility requirements are restrictive, limiting its use to those whose income arises primarily from a family-owned farm.

Chapter 9 is designed to allow a municipality to continue operating while it works out a repayment plan for its creditors. A municipal unit cannot liquidate its assets to satisfy its debts.