Restructuring Debt Through Chapter 11 Bankruptcy For Individuals

When it comes to filing individual bankruptcy, most people are familiar with Chapter 7 and Chapter 13 of the United States Bankruptcy Code. Many people even know that Chapter 7 focuses on liquidating debts while Chapter 13 focuses on restructuring debts and repaying creditors.

What many people don’t realize is that there is a third option when filing bankruptcy. Although it is most often used by businesses, some individuals can file for Chapter 11 bankruptcy.

What Is Chapter 11 Bankruptcy And How Does It Work?

Similar to Chapter 13, the Chapter 11 bankruptcy process focuses on reorganizing debt. But there are some important distinctions between the two that make Chapter 11 either the preferred option or the only option for certain individuals.

  • Debt Limits: Chapter 13 is often chosen by those who have too much debt to qualify for Chapter 7. But Chapter 13 also has debt limits (currently just under $395,000 in unsecured debt and about $1.184 million in secured debt). If your debt exceeds these amounts, you may need to choose Chapter 11.
  • Time Limits: A typical Chapter 13 bankruptcy lasts about five years. Chapter 11, however, has no time limits. The upside is that Chapter 11 gives you more time to repay your debts. The downside is that you do not want to be in bankruptcy any longer than you need to be.

Why Choose Chapter 11 Bankruptcy?

Generally speaking, Chapter 11 is the most expensive and time-consuming option for individual bankruptcy. For these reasons, not many people choose it if they have other options. However, it is an important tool for certain individuals with unique debt situations. It can also apply to individual business owners if they run a sole proprietorship.

Before you decide on any course of action, however, please confer with an experienced lawyer to fully understand all of your legal options.

Call My Firm Today To Discuss Your Bankruptcy Needs

I am Pennsylvania attorney John R.K. Solt. For more than 40 years, I have been helping clients in the Lehigh Valley resolve debt issues and get a fresh financial start. To discuss your case with me, call John R.K. Solt, P.C., in Bethlehem at 610-601-5381 . You can also fill out this online contact form.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.