Clients often ask me about the different types of bankruptcy, including Chapter 11 bankruptcy. A Chapter 11 bankruptcy serves two specific purposes: 1) restructuring business debt and 2) restructuring consumer debt for individuals that have too much debt to qualify for Chapter 13 bankruptcy.

Chapter 11 bankruptcy can be a good option for businesses, but the business has to reorganize its debt to continue operations. Clients usually ask about this type of business when they have a business that is struggling. This type of bankruptcy will only work for businesses that have opportunities to regain profitability in the long run. For businesses that have little hope in regaining profitability, Chapter 7 is a better option since a Chapter 11 will only restructure debt but not eliminate it.

For individuals, Chapter 11 bankruptcy is an option for those with debts that exceed Chapter 13 debt limitations. For those with over $1,081,400 of secured debt (home/car loans) and/or $360,475 of unsecured debt (any other type of debt except student loans and taxes), you cannot qualify for Chapter 13. In Missouri, Chapter 11 legal fees can be very high, so it is only recommended for businesses with an optimistic future or for individuals that don’t qualify for Chapter 13. At the Missouri Bankruptcy Center, we can help evaluate your situation to see if Chapter 11 bankruptcy is right for you.