Chapter 11 was originally intended for businesses, but individuals or families whose debt is too large to allow them to qualify for a Chapter 13 bankruptcy can file for Chapter 11 instead. In essence, Chapter 11 is very similar to Chapter 13 in that it involves the restructuring of debt payments over a period of several years, at the end of which time all dischargeable debt is erased. This is true whether the debtor is a family or a small business.
Small business owners who file for Chapter 11 Bankruptcy can even keep their small business operating during the repayment period instead of being required to close their doors, as long as they adhere to the terms of their repayment plan. The process of filing for Chapter 11 is much more complicated and time-consuming than what is involved in filing for Chapter 7 or Chapter 13, but for many individuals and small businesses it is their only option for dealing with their financial challenges.
The first step is determining if this fits your individual and business needs. An attorney can walk you through the other options to help you decide if Chapter 11 is what you need.
Completing this process could take years, and you’re limited to filing just once within a six-month period. You will need to provide a list of assets, liabilities, income, and expenditures.
A meeting will be set to meet with creditors and you may file a plan for repaying your debt during the first four months. Once that time has passed, creditors will introduce their own plans for recovery.
Subsection V to Chapter 11 was added by Congress effective February 19, 2020. Small business bankruptcy is now much more flexible for small businesses. The complexity and expense of Chapter 11 has been significantly reduced.
Let a skilled Chapter 11 attorney help you understand what else is involved in filing for Chapter 13 and seeing whether doing so makes sense for your family or small business.