text: chapter 7 and chapter 11? bankrultcy any one can help me in distingusihing chapter 7 and chapter 11 in filing bankruptcy chapter 7 is a liquidation action.  there is no bankruptcy repayment plan per se, but the trustee gathers together all of the debtor's non-exempt assets and sells them and distributes them to the creditors in accordance to the bankruptcy code.  chapter 11 is a reorganization action usually involving partnerships or corporations and very occasionally individuals.  a chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time.  a great overview can be found here: http://www.uscourts.gov/bankruptcycourts/bankruptcybasics.html