There are several other types of bankruptcy. You will hear about one or more of these commonly in the media. While they are generally not related to consumer bankruptcy, it seems appropriate to at least give them a mention.
Chapter 9—Municipality Bankruptcy
The federal government is allowed by law to operate in a deficit. States, cities, and towns are generally not allowed this same privilege. It happens from time to time that a city goes bankrupt. In other words, the city is unable to meet its legally obligated payments. These payments can include benefits to workers and citizens, payments on outstanding debt like municipal bonds, and operating expenses.
A famous recent example is the bankruptcy of the City of Detroit. At the time of publication, the case is ongoing. In reaching agreements with creditors, the City of Detroit has agreed to drastic cutbacks in employee salaries, operating budgets, and public entitlements. The city is also selling off assets like priceless works of art.
This form of bankruptcy is very rare, but it has a severe impact on the region of the bankrupt municipality.
Chapter 11—Corporate Reorganization and Wealthy Consumers
There are two types of Chapter 11 bankruptcy. The most well known is corporate reorganization or unwinding. Reorganization was done by General Motors in 2008 to 2009. Whereas Pan Am, a number of years back, used bankruptcy to shut down. This is like Chapter 13 for corporate entities. There is even a Chapter 11 Plan of Reorganization.
The second type of Chapter 11 is for individuals who meet a certain wealth threshold. Their bankruptcies are too complicated for the Chapter 7 or Chapter 13 system with numerous creditors and more experts needed to value and sell off assets. If you encounter a Chapter 11 consumer bankruptcy, go immediately to an expert attorney. Do not even consider attempting to navigate this extremely complex form of bankruptcy on your own, without an attorney’s guidance.
Chapter 12—Family Farmers and Fishermen
This author has encountered two Chapter 12 bankruptcies in his career. Both were related to family farms. Very few judges have experience with this chapter of the bankruptcy code, and often experts are called in to assist. Bankruptcy law gives special consideration to consumers whose primary line of work is farming or fishing. Assets and debts of farmers and fisherman do not fall neatly into the categories of Chapter 7 and Chapter 13 bankruptcies. Farmers typically operate on a different system of financing from banks than ordinary consumers. Also, the valuation of crops is a specialized matter. Operationally, a Chapter 12 bankruptcy is similar to Chapter 13. Again, if you run into this type of bankruptcy, proceed immediately to a qualified lawyer to assist.
Chapter 15—International Bankruptcy
This is a special form of bankruptcy for multinational corporations. Again, because of the unique structure of financing multinational companies, and marshalling and disposing of assets in multiple countries, experts and a special system of bankruptcy law are called into play.