In most instances of personal bankruptcy, an individual evaluates the advantages and drawbacks of using either Chapter 7 or Chapter 13. These two forms of bankruptcy actually account for more than 99 percent of all individual bankruptcies filed in the United States each year.
However, in some specific circumstances it is possible that an individual may file for bankruptcy under Chapter 11, which is intended primarily for businesses who hope to keep creditors at bay long enough to turn the ship around and reach profitability.
In order to even consider qualifying for a Chapter 11 as an individual consumer, a person must have both a significant amount of debt to discharge and also a significant income he or she projects will continue into the future.
If you believe that you may qualify for Chapter 11 bankruptcy, you should consult with a skilled attorney in your area who understands the regional bankruptcy courts and systems available to you. With proper guidance, you can understand the full scope of the road ahead of you and identify potential pitfalls to avoid along the way.
Filing Chapter 11 as an individual
In the vast majority of cases, individual consumers do not choose Chapter 11 because it is primarily built to service businesses. A business with good income but substantial debt that is keeping it from profitability might use Chapter 11 to create some breathing room so that it can actually turn profitable inside a given timeframe.
The mechanics of Chapter 11 resemble those of Chapter 13, where a consumer can create a repayment plan to discharge debt over time. However, Chapter 11 is even more desirable for many debtors.
The purpose of any Chapter 11 procedure is not merely to discharge debt for to reach profitability. An individual who might pursue Chapter 11 is probably someone who has significant income but is overwhelmed by debt that is effectively canceling out that income.
If approved for Chapter 11, the debtor may get a court to approve a repayment amount that creditors object to, but the court can approve and push it through anyway. While only about one in every thousand personal bankruptcies employ this tactic, it may be the right fit for you.
Are you prepared to follow through?
However it is that you found yourself in this dilemma, it's not going to dissolve and go away on its own. It is wise to seek out professional guidance that can help you honestly assess your financial affairs and identify the bankruptcy plan that best fits your needs while protecting your rights and privileges along the way.