Macco Law Group, LLP

Filing Chapter 11 as an individual

Filing Chapter 11 as an individual

In most cases, individuals filing for bankruptcy in New York have the choice of filing either Chapter 7 or Chapter 13. At Macco & Stern, we know that both Chapter 13 and Chapter 7 have strict eligibility requirements. As an individual with a high net worth, you may have accumulated too much debt, in the form of car loans and mortgages, to qualify for either. If that is the case, you may have the option of filing under Chapter 11.

Even though, according to FindLaw, Chapter 11 pertains primarily to businesses, on rare occasions when your excessive debt falls well outside the limits of Chapter 7 and Chapter 13 allowances, you may file Chapter 11 as an individual. The U.S. Supreme Court ruled that individuals have the ability to file Chapter 11 in 1991. However, it still happens only on an extremely rare basis. While approximately one-third of consumer bankruptcies file Chapter 13, and over one-half file Chapter 7, the percentage of individuals who file Chapter 11 is 0.1 percent.

If you qualify for Chapter 11, it offers you several potential benefits. The first and most obvious is the ability to reorganize your debt rather than liquidating your assets to pay it off, even if your debt exceeds Chapter 13 limits. Even if you have creditors who object to your debt reorganization plan, the court can still push it through when you file Chapter 11. Another benefit of filing Chapter 11 is that it provides you more time in which to file your plan.

While all types of bankruptcy provide a possible escape from unmanageable debt, these features make Chapter 11 one of the most debtor-friendly types of bankruptcy for those who qualify. However, there are drawbacks to Chapter 11 as well. Filing for Chapter 11 is more costly than other types of bankruptcy, and the process also takes more time. More information about Chapter 11 for individuals is available on our website.