How does Chapter 11 work?
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How does Chapter 11 work?

| Sep 19, 2020 | Bankruptcy

Chapter 11 bankruptcy is one option for bankruptcy protection. Most often, you would file this as a business since most individuals file under Chapter 7 or 13.

According to the U.S. Courts, Chapter 11 does have some similarities to Chapters 7 and 13. As with those chapters, you must complete the pre-filing credit counseling course. You can do this anytime within the 180 days prior to filing your case. In addition, you cannot file Chapter 11 if you have previously filed bankruptcy under any chapter within the previous 180 days or had a case dismissed within that time. In addition, Chapter 11 is a reorganization plan similar to Chapter 13.

The process

You will file a petition with the court that provides financial information to begin your Chapter 11 bankruptcy. With your petition, you will have to include documentation of your assets, liabilities, income, expenditures and other financial details. You will also have to pay the fees, which are $1167 to file and another administrative fee of $500.

You also must file a plan for repaying your debts with the court. Your plan needs to cover specific details on how you will handle each type of debt. Your plan will usually be more complex if you are filing for a business than if you are filing as an individual.

Debtor in possession

When you file your case, you become a debtor in possession, which means that you will not have a trustee and will manage your own assets throughout the case. You maintain this status until the court accepts your repayment plan. It is rare to have trustees in cases filed under this chapter.