chapter 11 ProcessChapter 11 is a type of bankruptcy that is primarily filed by businesses to help them with reorganization and to help alleviate their financial burdens. Although this type of bankruptcy is geared towards corporations, it can also be filed by small businesses too. It is rare, but individuals can also qualify for Chapter 11 under certain circumstances.

This chapter of bankruptcy allows the debtor the opportunity to propose a new plan for their profits after the bankruptcy has been discharged. This may include cutting out unnecessary expenses and/or adding new sources for revenue. On the other hand, Chapter 7 is also known as the liquidation bankruptcy, and under this type of bankruptcy, business owners would be required to close the business. They would also be subject to selling off assets in order to pay off creditors.

Although the Chapter 11 process offers certain benefits for those who qualify, it can be a very expensive and time consuming form of bankruptcy. It is often more expensive than other types of bankruptcy.

Filing a Petition

The first step on your path to getting a Chapter 11 discharge is to file for a petition. In this case, either the creditor or the debtor can file this type of bankruptcy protection. If a creditor files for Chapter 11, it is referred to as involuntary petition.

After the petition has been filed with the court, an automatic stay is placed into effect. After the automatic stay is in effect, creditors are no longer allowed to pursue collections on old or new debts.


The major goal for filing for Chapter 11 is not liquidation, but profit. In order to achieve this goal, the business must undergo a reorganization process. A plan must be in place that will place creditors in different categories based on how their claims will be handled.


If the reorganization plan that is introduced to the court shows that the business owner has created a reasonable plan that is in compliance with the court, the bankruptcy court will generally approve it. After the plan has been confirmed, previous debts (those not in the plan) are discharged. The debtor is then required to pay back creditors in accordance to the reorganization plan.

The Chapter 11 process is available for businesses and some consumers who meet certain criteria. A bankruptcy lawyer can assist you with the filing process.

Do you need to know what your debt relief options are? Schedule a consultation with us and speak with one of our qualified attorneys.