Chapter 11 Personal Bankruptcy
Although Chapter 11 or “reorganization bankruptcy” is typically filed for businesses and organizations, there are certain cases where individuals file for it too. By filing a personal Chapter 11, an individual may be able to reorganize a substantial amount of personal debt or restructure his/her debts while operating a small business. Another option to consider for these individuals is the Chapter 13 bankruptcy, which share the similarity that both revolve around creating a new organizational plan.
Individuals who file for Chapter 11 are able to hold onto their personal assets while seeking a solution to repay creditors. There people are often labeled “debtors in possession” because they are able to protect valuables while filing bankruptcy. A chapter 11 plan may include future earnings for the filer and usually only encompass around 3-5 years just like a Chapter 13. However, the individual must receive credit counseling prior to filing and there is a limitation on how many times a person can file.
Normally, a personal filing for Chapter 11 means that the personal household exceeds $336,900 in unsecured liquidated debts or exceeds $1,010,650 in secured liquidated debts, which is why they cannot file for a Chapter 13. To file, one must submit a disclosure statement and a reorganization plan to the court. Once the court approves, the creditors and debtors must adhere to the plans’ regulations; the plan takes priority over anything else established in the past.