Are Consumer Bankruptcy and Personal Bankruptcy the Same Thing?

When an individual debtor — as opposed to a business debtor — is considering the possibility of filing for bankruptcy, there are a number of terms that can be used to describe the type of bankruptcy case. For a person who is contemplating bankruptcy, understanding when terms overlap and when they are distinct can be confusing, and the use of various terms can appear to complicate the overall bankruptcy process. While the bankruptcy process and U.S. bankruptcy law are, indeed, complex, our Oak Park bankruptcy attorneys can provide you with clarification concerning consumer bankruptcy or personal bankruptcy in Illinois. Consider the following information, and do not hesitate to reach out to our firm if we can answer any questions about getting started on a consumer bankruptcy case.

Personal Bankruptcy, Consumer Bankruptcy, and Individual Bankruptcy are Interchangeable Terms

Consumers are often confused about the different uses of the terms “personal bankruptcy,” “consumer bankruptcy,” and “individual bankruptcy,” wondering if these are three separate and distinct terms or if they are interchangeable. The first thing to know is that these terms are, in general, used interchangeably. If you are an individual or a consumer, you will be filing for personal bankruptcy as opposed to business bankruptcy. But you might also see the use of the term consumer bankruptcy or individual bankruptcy. In effect, all of these will likely mean the same thing for you: that you, individually, are filing for bankruptcy in relation to your personal debts rather than filing for bankruptcy as a business entity with business debts.

Of course, if you own a small business that is structured as a sole proprietorship, it is important to know that you and your business are not two distinct legal entities for financial purposes. Accordingly, if you have a sole proprietorship and want to file for business bankruptcy, you will be filing for personal (or individual or consumer) bankruptcy. Likewise, if you own a sole proprietorship and want to file for personal bankruptcy, your business assets and debts will also become part of the bankruptcy case.

Different Types of Personal, Consumer, or Individual Bankruptcy

Within the category of personal bankruptcy (or consumer or individual bankruptcy), there are different types of bankruptcy filings. Most often, consumers will file for one of the following two types of bankruptcy:

  • Chapter 7 bankruptcy (liquidation bankruptcy); or
  • Chapter 13 bankruptcy (reorganization bankruptcy).

When an individual files for either of the types of bankruptcy, it can be described as a personal bankruptcy, consumer bankruptcy, or individual bankruptcy filing. If an individual’s debt load is too high to qualify for Chapter 13 bankruptcy, they may also file for Chapter 11 bankruptcy, even though this type of bankruptcy is typically filed by businesses. In those circumstances, a Chapter 11 case might also be described as a consumer or personal bankruptcy.

Contact an Oak Park Consumer Bankruptcy Attorney

The personal bankruptcy process is complicated, but one of our Oak Park bankruptcy lawyers can help. Do not hesitate to reach out if you have questions or if you are ready to begin working on your bankruptcy petition. Contact the Emerson Law Firm for more information.



See Related Blog Posts:

Bankruptcy Code and Automatic Stay Apply to Federally Recognized Indian Tribes

Common Bankruptcy Exemptions to Know About




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