Chapter 11 Bankruptcy For Individuals

Chapter 11 Bankruptcy For Individuals

While Chapter 11 bankruptcy is generally used for businesses, individual debtors may also file for Chapter 11 protection.  In some cases, Chapter 11 may be the only bankruptcy option for an individual debtor.  For instance, an individual who is disqualified from filing Chapter 7 by the bankruptcy means test, and is also disqualified from Chapter 13 as a result of too much debt, can only file Chapter 11. The debt limits in Chapter 13 are currently set at $360,475 of unsecured debt and $1,081,400 of secured debt.

The Chapter 11 case follows many of the same or similar procedures and practices applied to Chapter 13 cases, including the submission of a proposed repayment plan, payments to creditors through a trustee, and attendance at a trustee’s meeting.  The Chapter 11 debtor must commit all disposable income to repaying debts for up to five years.  Disposable income in Chapter 11 is determined on a case-by-case basis.  The court will consider the individuals' monthly income, reduced by the individuals' reasonable monthly living expenses.  What constitutes disposable income in a Chapter 13 may not be disposable income in a Chapter 11 case.

Creditors are entitled to vote to accept or reject the debtor’s plan, but the bankruptcy judge can still approve the plan, provided that creditors receive as much during the plan as they would receive if the debtor’s assets were liquidated.  Ordinarily a Chapter 11 debtor will receive a discharge after completing all plan payments.

The bankruptcy code offers many options for individuals struggling with overwhelming debt.  Get a free consultation today by calling Attorney Gail Balser at the BK Law Group PC at (508) 499-3366 and discover how the federal bankruptcy laws can help you.