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Chapter 11 Q & A

If I declare Chapter 11 bankruptcy, will I lose my business?
Typically, your business can continue operating throughout Chapter 11 proceedings; while the goal of a Chapter 7 bankruptcy is to liquidate the business and discharge remaining debts, the goal of a Chapter 11 bankruptcy is to stop collections activity to give the business time to work out a repayment plan with creditors that will allow it to repay debts over a specified period, while continuing to operate.

Can individuals file under Chapter 11?
Typically, individuals will file under Chapter 11 when their debts are too large to qualify under Chapter 13.  In these situations, the reorganization plan is similar to those under Chapter 13, just applied under Chapter 11’s rules and procedures.  The limits that determine who can qualify under Chapter 13 change frequently; a knowledgeable bankruptcy attorney can examine your debt load and inform you of the options that are available to you.

If I own a business, do I have to file under Chapter 11?
No.  Chapter 7 bankruptcies are also available to businesses; under a Chapter 7 bankruptcy, a business usually ceases operation, its assets are liquidated, and the proceeds are used to pay creditors.  Determining which bankruptcy option is most appropriate for the needs of your business depends on your financial situation and your reasons for declaring bankruptcy.  


What does the Bankruptcy Trustee do?
In a Chapter 11 case, the Trustee monitors the case’s progress.  This includes reviewing monthly operating reports, disclosure statements, and proposed repayment plans.  The Trustee will also impose certain requirements upon you, such as filing financial reports and staying current on income and employee withholding tax payments. 

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