Chapter 11 Bankruptcy

Chapter 11 bankruptcy is the form with which people are most familiar as it routinely makes the news when corporations like General Motors or K-Mart are in financial trouble. Partnerships and corporations usually file Chapter 11.

However, debt relief through a Chapter 11 proceeding is also an option for individuals, particularly when they have either too much income or too much debt to qualify for chapter 7 or 13 bankruptcy.

Chapter 11 is often the best option for individuals who have too much value in non-exempt assets that they want/need to keep for Chapter 7 and who have too much debt to qualify for Chapter 13.

Chapter 11 offers more flexibility than Chapter 13, but it is also a more expensive and time-consuming process.  Many small business owners prefer to file for Chapter 13 if possible.

Chapter 11 bankruptcy is often referred to as “reorganization” bankruptcy because it allows you to restructure your debts and make reduced payment arrangements while maintaining ownership of your property. However, an individual may also use a Chapter 11 process for an “orderly liquidation” of assets.

Individual Chapter 11 debtors are usually able to keep their assets including but not limited to real estate, cars, complete ownership of businesses, and household furnishings. In fact, Individual Chapter 11 cases are often used to reorganize the mortgages or other liabilities encumbering real property when a debtor does not qualify for such relief under Chapter 13 because their case is too complex or they have too much income, too many assets and/or too many liabilities.

All bankruptcy proceedings have dischargeable and nondischargeable debts.