Are Chapter 11 Bankruptcy Filings For Individuals?

Filing and confirming a Chapter 11 bankruptcy plan can be expensive and complex. As a result, businesses file the majority of these cases. Individuals, however, are not barred from doing so, and a Morris County bankruptcy lawyer can offer the experience necessary to advise and counsel clients on all issues related to filing for Chapter 11 Bankruptcy.

Reasons Why Individuals May File Chapter 11 Bankruptcy

When an individual has large liabilities or is engaged in complex business transactions, Chapter 11 bankruptcy may be the best solution. Frequently, an individual Chapter 11 client is one who belongs in any of the following four categories:

  • An individual who has many highly complex, typically business-related, debts as well as assets and/or high income which can fund a Chapter 11 Plan
  • An individual who does not qualify for Chapter 7 or Chapter 13
  • An individual whose business responsibilities prevent him or her from filing for a Chapter 7 Plan
  • An individual who seeks to reorganize his or her debt while maintaining flexibility in accomplishing his or her financial goals.

The requirements for filing Chapter 11 bankruptcy are different for individuals than for businesses, but individuals can file Chapter 11 nonetheless. This would come as a surprise to many people who think a Chapter 11 filing is for business only, as more often than not it is a business that utilizes Chapter 11. This misconception aside, a Chapter 11 filing may be a necessary solution for an individual facing difficult financial circumstances. To avoid losing his or her income, home, business or other assets, this type of filing may be the only bankruptcy option.

Filing Chapter 11 Versus Chapter 13 Or Chapter 7 Bankruptcy

One may be surprised to find that filing for Chapter 11 bankruptcy is often the only bankruptcy option. Not everyone qualifies for Chapter 7 or Chapter 13.

As of 2011, an individual may only file Chapter 13 bankruptcy if his or her unsecured debts are, in aggregate, less than $360,475, and if his or her secured debts, in aggregate, are less than $1,081,400. Eligibility for filing Chapter 7 Bankruptcy is dependent upon meeting a “means test” and having no disposable income. The first step of the means test is straightforward, yet often difficult to meet: If your current monthly income is less than the median income for a household of your size in your state, you pass. Should an individual not meet this criterion, the next portion of the test gets significantly more difficult for a debtor to satisfy.

Benefits of Hiring a Morris County Bankruptcy Attorney

Given the time consuming and costly requirements for filing a Chapter 11 bankruptcy case, individuals need to choose wisely when seeking legal counsel. Many unforeseen stumbling blocks can occur in a Chapter 11 case. The best way to find out whether filing under Chapter 11 as an individual is right for you is to contact a Morris County bankruptcy attorney and schedule a consultation.

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