By far, the most common bankruptcy that an individual will file is either Chapter 7 or Chapter 13. A Chapter 7 bankruptcy is very affordable and comparatively quick, while a Chapter 13 bankruptcy will allow a debtor to hold on to their assets in return for adhering to a comprehensive repayment plan.
However, there is a third type of bankruptcy that individuals may file: Chapter 11. A Chapter 11 bankruptcy is comparatively rare in personal bankruptcy, but it does exist; it is similar to a Chapter 13 bankruptcy. According to Debt.org, a Chapter 11 bankruptcy may work for you if you do not wish to liquidate your assets in Chapter 7 or if you have too much debt for Chapter 13.
How much debt is too much debt?
Strictly speaking, you cannot have more than $1,184,200 in secure debt (like mortgages) or more than $394,725 in unsecured debt (like credit cards) to qualify for a Chapter 13 bankruptcy. Since this is a relatively high threshold, the majority of people who want to hold on to their assets typically choose to file a Chapter 13 bankruptcy.
Chapter 11 bankruptcies are most often filed by people who have a lot of money, such as pro athletes or celebrities. Chapter 11 may also be a popular option for real estate investors.
Should I file Chapter 11?
In most instances, probably not. Unless you have millions of dollars in debt, you are likely better off with a Chapter 13 bankruptcy filing. Plus, seeking approval for a Chapter 13 bankruptcy is less complicated than a Chapter 11.
