Bankruptcy is a process guided by federal court of bankruptcy act, which is further divided in chapters and titles. These chapters include repayment of debts and liabilities under supervision of protection of bankruptcy court under chapter 13 or wiping debts altogether under Chapter 7 Bankruptcy federal court. Applying Bankruptcy although automatically stop your liabilities and creditor from collecting debts from you, but at the same time open the games of insults, harassment and negative image in society and market. Law prohibits creditors and debenture holders from taking legal actions without the permission of official liquidators or court of law. Bankruptcy is broadly classified in two different types and chapters.
1) Liquidation bankruptcy or chapter 4.
2) Reorganization bankruptcy or chapter 13.

1. Liquidation Bankruptcy /Chapter 4:
In United States of America, liquidation is popularly known as chapter 7. It is that form of bankruptcy where asserts are sold off by Debtor or official liquidator to discharge liabilities and debts.
When you file Bankruptcy declaration under provision of chapter 7 it is known as liquidation Bankruptcy. Chapter 7 turns on liability on your private state and property for paying debts and liabilities court may order to sell your business as well as private asserts to discharge liabilities and debts. Filling bankruptcy doesn’t miraculously erase your financial problems for long term. but sometime in critical situation it is only way to crush financial burden, which is not in control any more.
2. Reorganization bankruptcy / chapter 13:
Reorganization is popularly known as chapter 13 in the United States. In reorganization some debts which are prudential are settled first either in full or in portion of original debt and other debts on later date. Some are not discharged at all. Reorganization is a procedural method under which payment plans generally cove four to five year time.
Forgive debt or debts don’t require to be discharged may include following points:
• Children’s support and debts of alimony.
• Student loans, fines and penalties tax debts
• Forgiven debts includes debts emerged from death or personal injury caused due to accident or while driving.
• Debts which are not mentioned in list on day in bankruptcy document. In reorganization court place a complete restriction on your right to spend money according to your will and wisdom. In many cases court take provision on your asserts including personal properties to discharge your liabilities.