Which Chapter corresponds to Liquidation in the four types of bankruptcy?

• A. Chapter 7 Liquidation
• B. Chapter 11 Business
• C. Chapter 12 Farmland
• D. Chapter 13 Individual

Answer: (A)

Liquidation means selling the debtor’s non-exempt assets to raise money for creditors, with the remaining debts discharged. This process is handled under Chapter 7, which is specifically designed for liquidation. It can apply to both individuals and businesses, but the defining feature is the asset sale to pay off creditors and end the burden of remaining debts. By contrast, Chapter 11 is about reorganizing debts to keep a business (or sometimes an individual) operating, Chapter 12 provides debt relief for family farmers and fishermen, and Chapter 13 lets individuals repay a portion of what they owe through a court-approved plan. So the chapter that corresponds to liquidation is Chapter 7.