Types of Bankruptcy Cases Five separate chapters of the Code create different types of relief and determine the nature of proceedings available to those seeking protection under the Code. The Trustee may determine at the beginning of a proceeding that it is a no-asset case, meaning that no property exists in the bankruptcy estate that could be sold to generate funds for distribution. The debtor's objective in a Chapter 7 case is to be relieved of all unsecured debt. The debtor obtains this relief through the bankruptcy discharge, which forever bars creditors from trying to collect on prepetition debts. Some debts are non-dischargeable.
Examples are alimony, child support, and obligations obtained through fraud.
The most famous, or infamous, example of use of this chapter was the bankruptcy of California's Orange County. Since this is not a frequently used portion of the Code, suffice to say that it has specific sections and criteria set out in the Code, and one should consult the Code very carefully if presented with the filing of a petition under Chapter 9. One thing to remember, however, is that a Chapter 9 case may only be commenced on a voluntary basis. There are no involuntary Chapter 9 proceedings. A Chapter 11 case is commonly referred to as a business reorganization, but it is not limited to businesses, nor is it limited to reorganizations.