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

This chapter of bankruptcy allows the debtor an opportunity to propose a new plan for their profits after the courts discharge the bankruptcy. This may include cutting out unnecessary expenses and/or adding new sources for revenue. On the other hand, Chapter 7 is also known as liquidation bankruptcy, and under this type of bankruptcy, the court would require business owners to close the business. The courts would also require the business to sell 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 debtor or creditor files the petition with the court, the court places an automatic stay into effect. After the automatic stay is in effect, the courts do not allow creditors 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 business owner submits a reasonable and compliant reorganization plan, the bankruptcy court will generally approve it. After the court confirms the plan, previous debts (those not in the plan) are discharged. The courts then require the debtor 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 and increase the chapter 11 success rate.

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