Of course we know that GM filed a Chapter 11 Bankruptcy.  Chrysler filed, as did Texaco, Delta and most airlines.  It seems that every time you hear of a Chapter 11 it’s a business that is being discussed.  However, a Chapter 11 bankruptcy is often an appropriate strategy for an individual under certain circumstances.

Certainly a Chapter 11 case is more expensive and more complicated that either a Chapter 7 or Chapter 13 bankruptcy.  The case is more expensive because its more complicated and provides more flexibility for a debtor in reorganizing finances.

While a Chapter 13 case requires payments to begin within 30 days of filing the case, often payments in a Chapter 11 case don’t begin for 6 to 9 months after the case is filed.  Additionally, while the payments in a Chapter 13 case have a significant regularity, often Chapter 11’s include payments that are staggered or sporadic given the necessities of the debtor.

There’s much more flexibility in a Chapter 11.  After the 2005 amendments to the bankruptcy code every individual debtor is required to commit 100% of the debtor’s disposable income for 5 years (a Chapter 13 plan can be as short as 36 months).

Sometimes because of the total secure debt that exists, a person may not qualify for a Chapter 13 so a Chapter 11 is the only option.  Again, a bankruptcy filing is often necessary to manage difficult financial circumstances.  An experienced bankruptcy attorney can help evaluate these options.