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Chapter 11

There are six chapters available for debtors filing bankruptcy: Chapter 7, 9, 11, 12, 13 and 15. While it’s the chapter 11 that receives most of the spotlight – chapter 7 and 13 are the most commonly filed chapters by individual debtors. As an aside, chapter 9 is intended for government municipalities, chapter 12 for family farmers and chapter 15 for international entities.

Chapter 11 was initially intended for business and corporate debtors and not individual consumer debtors. This all changed in a landmark Supreme Court case, Toibb v. Radloff which held that individuals are eligible to file chapter 11 and benefit from the automatic stay against creditors. This is partially the reason why chapter 11 is more complicated and requires greater preparation prior to filing. The debtor in a chapter 11 has obligations that do not exist in the more common filed chapter 7 and 13. Visit the US Trustee Website

Despite the additional obligations, some individual debtors will not qualify under a chapter 7 or 13, and are therefore forced to file a chapter 11. This is generally a result of significant income or they exceed the debt limitation allowed in a chapter 13. Nevertheless, a debtor can file a chapter 11 bankruptcy in an attempt to successfully restructure their debt and save their home.