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Chapter 11 Bankruptcy—What Is it?

Many people have heard of Chapter 7 or even Chapter 13 bankruptcy, but Chapter 11 bankruptcy is also an option that may work well for some. But how do you know if you qualify? This Chapter 11 bankruptcy definition will help you to understand the basics of filing, as well as answer questions about whether or not you are eligible. 

Chapter 11 bankruptcy is for people who own businesses mainly, or those who work in partnership with another business owner. The goal of this type of bankruptcy is to reorganize the payment of the overall debt, so that it is more manageable. This usually means that the payment schedule is extended, and the person or company filing agrees that the debt will be paid under the condition of the new terms. To further explain the Chapter 11 bankruptcy definition, the person or company must file in court, and must have a schedule of all the assets and liabilities for the company, a timeline for income and expenditures, a schedule of all unexpired leases and contracts, and a statement detailing all financial affairs. The judge must be able to take a good look at all these documents in order to make the best ruling for the case, so it may be best to talk to a lawyer about making sure these items are submitted correctly.

When you’re filing for bankruptcy, you should make sure that you make the decision a few weeks before you actually plan to file, so that you can have money saved for court and lawyer fees. The fee for filing your case is $1,000, along with an administrative fee, which is $39. You can pay in installments in some courts (with permission); otherwise, you’ll have to give your fees to the clerk when you come to court to file.

This Chapter 11 bankruptcy definition may help you to decide whether or not you or your business partner(s) should file for bankruptcy, but you should also take a good look at the organization of your business finances before and after making your claim. For instance, you should set up your own schedule and timelines that will let you know when bills are due, and if you know you can not meet the deadlines for any reason, you should contact your creditors as soon as possible to make alternate arrangements.

Bankruptcy could help to save your business, but you should work out your debts by making arrangement with creditors yourself if at all possible in order to keep a bankruptcy from showing up on your credit report. For more information on how to file for bankruptcy, how to know the difference between Chapter 7, Chapter 11, and Chapter 13 bankruptcy, or to get more of a Chapter 11 bankruptcy definition, visit US Bankruptcy Courts.