Research being done on individual Chapter 11 filings

Florida residents who have a lot of debt and the ability to earn future income may decide to file Chapter 11 bankruptcy. Though Chapter 11 is typically used by businesses, it is available to consumers as well. A preliminary report by the American Bankruptcy Institute’s Task Force on Individual Chapter 11 found that somewhere between one-quarter and one-third of Chapter 11 bankruptcy cases are filed by individuals.

The most common form of bankruptcy filed by individuals is Chapter 7 bankruptcy. In Chapter 7, a debtor’s non-exempt assets will be liquidated with the proceeds used to pay creditors. A debtor who has a regular source of income and can develop a repayment plan may want to file under Chapter 13 instead. Chapter 11 bankruptcy is available to individuals who have debts that are greater than the Chapter 13 statutory thresholds.

Until the task force was created, there had been very little research on individual Chapter 11 bankruptcy filings. Individual Chapter 7, individual Chapter 13 and business Chapter 11 bankruptcy filings have been studied extensively. With the task force, the ABI is attempting to answer some basic questions about individual Chapter 11 filings such as whether or not people who filed Chapter 11 should have actually filed for Chapter 7 or 13.

People who file for Chapter 11 bankruptcy usually have a lot of debt, a lot of assets and a complicated bankruptcy case. Attorneys will note to their clients that one advantage of this chapter is that the time limitation for filing a repayment plan is not as compressed as it is under Chapter 13.