The Individual Chapter 11

Don't qualify for Chapter 13, but make too much income for a Chapter 7? You might consider Chapter 11. Yes, individuals can file a Chapter 11; it's just not for business anymore. Why opt for Chapter 11? Generally, the following:

1. Jurisdictional Amount - To qualify for a Chapter 13 you cannot have in excess of $1,010,650 in secured debt (mortgages, for example) and $336,900 in unsecured debts. There are no limits in Chapter 11.

2. Supervision - A Chapter 13 plan is monitored throughout its implementation in the bankruptcy court. There is no practical supervision of a Chapter 11 plan while it is being implemented; creditors have rights at state law, but the bankruptcy case is usually closed after the initial payments under the plan of reorganization.

3.  Time - A Chapter 13 plan is due within 15 days from the date the petition in bankruptcy is filed. A plan of reorganization in a Chapter 11 case can take up to 300 days to be filed giving you time to negotiate its terms.

4.  Timing of Payments - Payments under a Chapter 13 must start within 30 days of the filing of the Chapter 13 plan or the petition date, whichever is earlier. The payments under a Chapter 11 plan usually do not start until confirmation of the plan which may be 300 days later or more.

5.  Length of the Plan - A Chapter 13 plan must be completed in 5 years. There is no time limit for a Chapter 11 plan.

These are but a few of the reasons to consider a Chapter 11 for an individual rather than a Chapter 13, but as always you must consult a bankruptcy professional before making any decision. These statements are generalizations and may not apply in your specific circumstances. One of the more significant differences between Chapter 11 and Chapter 13 is that in the former your creditors get a right to vote as to whether to accept your plan. If you fail to get the vote of your creditors (in amount and number as specified by the Bankruptcy Code), then you may regret the decision to opt for Chapter 11. Again, consult a bankruptcy professional.