Can An Individual File Chapter 11 Bankruptcy?

 Posted on February 28, 2025 in Chapter 11 Bankruptcy

Chapter 11 bankruptcy is known as the "reorganization" bankruptcy that allows filers to reorganize their debt. It is usually utilized by businesses wishing to file bankruptcy while continuing to operate their companies.

Yet Chapter 11 bankruptcy is not just for businesses. Individuals may also qualify to file for Chapter 11 bankruptcy, and in some cases may have to file for Chapter 11 if they do not qualify for Chapter 13. An experienced Houston, TX Chapter 11 bankruptcy attorney can answer your questions about whether filing for Chapter 11 bankruptcy as an individual is the right choice for you. 

How Does Chapter 11 Bankruptcy For Individuals Work?

Eligibility

Individuals may file for bankruptcy under Chapter 7, Chapter 13, or Chapter 11. Usually, individuals will file Chapter 11 when their debt is too large to qualify for Chapter 13, or if most of their debt is business debt. There is no cap on the amount of debt an individual can have under Chapter 11, unlike Chapter 7 and Chapter 13.

Filing Procedure

A Chapter 11 bankruptcy begins with the filing of a petition with the court. The debtor must file lists of assets and liabilities, current income and expenses, contracts and unexpired leases, and a statement of financial affairs.

What Are Benefits of Chapter 11 for Individuals?

Keep Your Home

Debtors in Chapter 11 can keep their primary residence. They must pay back arrears, but may have a significant number of years to do so (longer than Chapter 13’s five-year payment cap).

No Base Income Requirement

Chapter 11 has no income requirement for debtors and, in fact, in many Chapter 11 cases the debtor’s assets are liquidated to cover the plan payments.

Simple Means Test

The Chapter 11 means test is a simple and short form that only requires the debtor to show current monthly income. Creditors may challenge unreasonable expenses, but that does not tend to happen very often.

No Time Limit 

There is no deadline for filing a plan under Chapter 11, and the debtor does not have to make payments until the plan is approved by the court. Chapter 11 payment plans also do not have a time limit to pay back the debt, although certain debts, such as taxes, do have a five-year time limit.

No Trustee Involvement

Usually, no trustee is appointed in Chapter 11 unless there is fraud. The debtor is held to the standard of a fiduciary, taking care of the bankruptcy estate for creditors.

Call a Houston, TX Bankruptcy Attorney 

If you have significant amounts of debt and want to get a financial fresh start, the experienced Brazoria, TX bankruptcy attorney at The Fealy Law Firm, PC can advise you on the appropriate options for you. Filing for bankruptcy is never an easy decision, yet in many cases it can be the right one. Call our law firm at 713-526-5220 for a complimentary consultation.