There are two broad forms of bankruptcy, no matter your definition 0 Liquidation and reorganization. Liquidation is provided for in the United States under Chapter 7 of the Bankruptcy Code while Reorganization is covered under chapters11, 12 and 13.
CHAPTER 7
Chapter 7 bankruptcy is the chapter of the Bankruptcy Code that provides for the sale of the debtor0s non-exempt assets for the distribution of the proceeds to creditors (liquidation). Usually, a trustee collects the debtor0s assets, which forms the bankruptcy estate, under court supervision and 0converts0 it to cash for onward distribution to creditors. This is subject to the rights of the debtor to keep certain assets, which are exempt (for example personal clothing). Also, distribution of the liquidated assets is subject to the rights of secured creditors. As may be expected, most Chapter 7 bankruptcy cases are 0no assets0 cases, as the debtor literally has no assets that can be liquidated.
An individual or business filing for a Chapter 7 bankruptcy case is required to begin by filing a petition with the relevant bankruptcy court serving his area or the area where the business is registered or operated with its main assets.
The petition stage can be described as the declaration stage. […]

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