REG Bankruptcy · Updated November 2026
Chapter 7 or Chapter 11: What Is the Debtor Trying to Do?
Chapter 7 generally liquidates. Chapter 11 generally reorganizes. Then analyze creditor priority and discharge separately.
Chapter 7
Think liquidation. Assets are collected and distributed under the bankruptcy priority framework, subject to exemptions and other rules.
Chapter 11
Think reorganization. The debtor generally attempts to restructure obligations and continue operating under an approved plan.
Automatic stay
A filing can temporarily stop many creditor collection actions.
Secured and unsecured creditors
Collateral rights and statutory priority categories affect treatment.
Discharge
Not every debt is dischargeable. Learn the major nondischargeable categories emphasized by current review materials.
The takeaway
Chapter 7 liquidates. Chapter 11 reorganizes.
Related Summit guides
FAQ
Does bankruptcy erase every debt?
No.
Can businesses use Chapter 11?
Yes.
Does the automatic stay affect collections?
Yes.