Should I File for Chapter 11 or Chapter 13 Bankruptcy?
Are you currently considering bankruptcy and trying to determine which type of bankruptcy is the best option for you, and which type of bankruptcy you are eligible to file for based on your current financial circumstances and US bankruptcy law? For debtors who are considering a reorganization bankruptcy — as opposed to a liquidation bankruptcy — the two general options are likely either Chapter 13 bankruptcy or Chapter 11 bankruptcy. However, it is critical to understand that it may not be possible to choose one or the other, and to know that other types of bankruptcy such as Subchapter V or Chapter 12 might also be options. If you are wondering whether you should file for Chapter 11 or Chapter 13 bankruptcy, our West Palm Beach bankruptcy lawyers are here to assist you.
Are You Filing as an Individual?
If you are planning to file for a type of reorganization as an individual (or as a sole proprietor), you will want to file for Chapter 13 bankruptcy if you are eligible. The general eligibility requirement for Chapter 13 bankruptcy is that you have primarily consumer debts, and your debts must not exceed the debt ceiling for Chapter 13 bankruptcy.
The latter eligibility requirement is particularly important for you to pay attention to because the debt ceiling recently changed. Under a previous law, individuals could be eligible for Chapter 13 bankruptcy if they had combined secured and unsecured debts below $2,750,000. However, that debt ceiling has now changed. The debt limits are currently $1,395,875 for secured debt and $465,275 for unsecured debt. If you do not meet the requirements, you can file for Chapter 11 instead of Chapter 13.
Are You Filing as a Business?
Unless you are a sole proprietor, if you are filing for reorganization bankruptcy as a business, you are not eligible for Chapter 13 bankruptcy. However, in addition to Chapter 11 bankruptcy, it is important to determine your eligibility for less costly, less time-consuming, and more streamlined types of reorganization bankruptcy for businesses.
Depending on your business’s total debt and other factors concerning the business, you could be eligible for Subchapter V, which is a subchapter of Chapter 11. It is designed to make the reorganization bankruptcy process easier for smaller businesses. The debt ceiling for Subchapter V also changed recently, dropping from $7,500,000 to $3,024,725. In addition, businesses that meet the definition of family farmers or fishermen could be eligible for a different type of streamline reorganization bankruptcy, Chapter 12. Before you make any decisions or assumptions, it is important to discuss the specific details of your business with a bankruptcy attorney.
Contact a West Palm Beach Bankruptcy Attorneys Today
If you have questions or concerns about individual or business bankruptcy options, it is important to get in touch with an experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller to discuss your financial circumstances. An attorney at our firm can help you to understand your bankruptcy options, and we are here to work with you on your case once you are ready to file. Contact us for more information.
Sources:
law.cornell.edu/uscode/text/11
uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics
justice.gov/ust/subchapter-v
