Who Can File for Chapter 11 Bankruptcy?

What can you do when debts and bills are piling up and no money is coming in, your business is failing and you can't make ends meet? An option may be filing for bankruptcy.
There are several types of bankruptcies that can be filed. Here is a quick look at them, but, of course, consult with an attorney to make sure you are filing properly.

Types

Who you are and what your situation is will determine whether you will file for Chapter 7, 11, 12 or 13 bankruptcy.

Chapters 7, 12 and 13

Chapter 7 is for individuals or married couples who do not have the means to pay back their debts; Chapter 12 is for farms or homesteads; and Chapter 13 is for individuals who will be able to pay back their debts and need to set up a payment plan.

Chapter 11

Individuals can file for Chapter 11 bankruptcy, but this form of filing is usually reserved for companies. It can be a very complicated process, so find someone who specializes in this area of law to help you save your business.

Why Chapter 11?

If you want to continue to operate your business but need to develop a plan to pay back your debts you will want to file Chapter 11. The bankruptcy court and a trustee will arrange a payment schedule so that all parties are repaid.

Warning

Although you will still be able to run your business, your debtors and other creditors will have a say in its management, as you are still liable for the debts you owe. Be prepared for this change, because once you file the situation is out of your hands.

References

• U.S. Bankruptcy Courts