How to File for Chapter 11 Bankruptcy

Have you ever driven up to a favorite store, only to see that the windows are covered with signs announcing a Chapter 11 Bankruptcy Sale? Maybe you’ve heard a news story about a big box retailer or name brand corporation filing for Chapter 11. Ever wonder what exactly that means, and how it might apply to your own debt problems?

Though a Chapter 11 bankruptcy is usually associated with big businesses, it is also available to individuals. Chapter 11 is a way of filing for bankruptcy that involves reorganizing your debt so that you don’t have to get rid of all of your assets. Most individuals who are interested in this type of filing opt for Chapter 13.

The good news about filing for bankruptcy, whether it’s a Chapter 7, Chapter 11 or Chapter 13 is that as soon as you’ve filed, your creditors are not permitted to pursue you for the money that you owe. They do, however, have a say in the way that you reorganize: they can propose a plan and are also asked to approve a plan. Though creditors do not like the idea of accepting a reorganization plan, they recognize that they are going to get more of their money back than would be true if you file for Chapter 7, which completely discharges all debts and could leave them with absolutely none of what they’re owed.

The repayment plan for a Chapter 11 bankruptcy usually encompasses a time period between six months and two years, but there is no time limit imposed on the debtor. The person or business applying for a Chapter 11 bankruptcy does have to pay a $1,717 one-time filing fee, and because this type of bankruptcy is so complicated, it can also rack up big legal fees. Still, for individuals who don’t want to opt for a Chapter 7 bankruptcy that would force liquidation of all assets but who don’t owe enough to qualify for Chapter 13, Chapter 11 may be the best option for getting out from under their debt. It allows debts to be written down and interest rates to be reduced, as well as making way for extended repayment terms that lower the amount that you have to pay each month.

If you file for Chapter 11 bankruptcy, you will have to participate in a credit counseling course. For more information on the specifics, contact our bankruptcy attorney today to set up an appointment.