Chapter 11 for Individuals

Sometimes Individuals Need to File Under Chapter 11

Most people associate Chapter 11 bankruptcy with airlines, auto manufacturers and other major corporations facing millions or billions in bond obligations, pension commitments, tax debts or tort liability. Business reorganization in the bankruptcy courts is a difficult and cumbersome process that fails more often than it succeeds.

Because of the close association between Chapter 11 and business reorganization, it's easy to forget that individuals can file for Chapter 11 relief, too. Sometimes they have no choice. If you're ineligible for Chapter 13 bankruptcy, or if your debts and assets are unusually complicated, Chapter 11 might be right for you.

Call 866.439.0886 for advice about Chapter 11 bankruptcy for individuals

People whose indebtedness exceeds certain levels can't file for Chapter 13 bankruptcy. Though adjusted from time to time, the maximums in late 2008 were $336,900 for unsecured debts and $1,010,650 for secured debts. Individuals carrying this load of debt will usually have incomes high enough to disqualify them for Chapter 7 relief as well.

Liability on a personal guaranty of business debt, a high home mortgage, or serious tax problems can put you in Chapter 11 territory, just like celebrities from M.C. Hammer to Wayne Newton.

The goal in Chapter 11 for individuals is pretty much the same as it is for corporations — to use the time you're protected from collections pressure to develop and present a plan that meets the claims of each class of creditors on the most favorable terms possible while protecting your personal assets.

Most of the work in a Chapter 11 case falls under two heads: first, to develop and present an accurate understanding of your overall financial situation; and second, to use that information as a basis for negotiating the details of your Chapter 11 plan with your major creditors.

Basically, you need the approval of all important secured creditors, as well as the support of general creditors holding a majority of your unsecured indebtedness. Special creditors such as the IRS have a significant voice, as well. Depending on how complicated your debt picture is, it's sometimes very difficult to put together a plan that will attract enough support to win confirmation — the ultimate goal of Chapter 11.

We advise Chapter 11 clients in Maryland and metro Washington, D.C.

At The Fried Law Firm, our experience with complex financial problems for both individual and business clients can give you a significant advantage. Our attorneys not only offer reliable legal advice, they also use their practical understanding of your difficulties and your positive options to help find ways to make Chapter 11 work for you, both in reducing your indebtedness and in protecting your assets.

To learn more about our ability to serve complex individual needs in Chapter 11 bankruptcy, contact a knowledgeable lawyer at The Fried Law Firm in Bethesda.