Chapter 11 for Individuals Not Just Businesses

Chapter 11 is typically thought of as a bankruptcy option for businesses. However, individuals may also file under Chapter 11, and this option is gaining wider popularity.

For example, Chapter 11 may be well suited for high-income filers who are unable to qualify under Chapter 7 or Chapter 13. Chapter 11 offers these individuals the potential to protect certain assets while overcoming complex debt problems. Since the economic downtown has been affecting wealthier households, these types of cases will likely become more commonplace.

Sole-proprietors may also seek debt relief under Chapter 11. In cases of sole-proprietorships, the bankruptcy would encompass both the personal and the business assets of the owner-debtor.

Finally real-estate investors, or other individuals with substantial real estate holdings that have lost significant value, may also seek debt relief under Chapter 11. In states like Florida that have been particularly hard-hit by declining property values, there has been a surge of individuals filing Chapter 11. The Daily Record reports that last year in the Middle District of Florida individuals made up 40 percent of Chapter 11 filers, up from 10 percent in 2004-2005. Half of the filings in the district last year involved investment properties.

Debtors filing under Chapter 11 are given up to five years to financially reorganize. This can provide much needed breathing space for individuals being hounded by creditors. If you are considering filing for bankruptcy, contact an experienced bankruptcy attorney to discuss all your available options and find the plan best suited to your financial goals.

Source: United States Courts, Reorganization Under the Bankruptcy Code