When an Individual Should File for Chapter 11 Bankruptcy

Chapter 11 bankruptcy is typically a type of bankruptcy that is filed by businesses in Florida. Yet there are certain cases in which an individual files for this type of bankruptcy. If you are considering personal bankruptcy either — filing either individually or jointly with your spouse — when should you be considering Chapter 11 bankruptcy? The short answer is that you should consider a Chapter 11 bankruptcy filing when you want to file for a type of reorganization bankruptcy but you have too much debt to qualify for Chapter 13 bankruptcy.

While Chapter 13 bankruptcy does not have the same strict requirements (such as passing the “means test”) as Chapter 7 bankruptcy, it does have a debt ceiling. Our Florida bankruptcy lawyers can explain in more detail, and we can discuss your eligibility with you today for Chapter 13 bankruptcy or, if necessary, Chapter 11 bankruptcy.

What are the Chapter 13 Debt Limits? 

The major eligibility requirement to file for Chapter 13 bankruptcy as an individual is that your debts are below the debt threshold or debt ceiling for a Chapter 13 filing.

For cases that are filed between April 1, 2025 and March 31, 2028, the Chapter 13 debt limits are as follows:

• $1,580,125 in secured debt; and
• $526,700 in unsecured debt.

If either your secured debt or your unsecured debt exceed those amounts cited above, you will not be eligible for a Chapter 13 bankruptcy filing. You cannot combine secured and unsecured debts for Chapter 13 eligibility — the two types of debts are considered separately. During the COVID-19 pandemic, the debt ceiling was temporarily raised. While it is possible that lawmakers could raise the Chapter 13 debt ceiling again and on a more permanent basis, the above limits are what you must comply with in order to file for Chapter 13 bankruptcy.

Filing for Chapter 11 Bankruptcy Instead

If you have too much secured debt, unsecured debt, or both to qualify for Chapter 13 bankruptcy, you can file for Chapter 11 bankruptcy instead. There are no debt limits for a Chapter 11 filing.

You should be aware that Chapter 11 cases can be more complicated and have higher filing fees than Chapter 13 bankruptcy, but a bankruptcy attorney can guide you through the process from start to finish.

Contact Our West Palm Beach Bankruptcy Attorneys Today to Learn More About Individual Chapter 11 Bankruptcy Cases in Florida

If you want to consider a reorganization bankruptcy as an individual but you have too much debt to qualify for Chapter 13 bankruptcy, Chapter 11 bankruptcy is typically your best option, as we discussed above. Though Chapter 11 filings can be more complex and have higher filing fees than Chapter 13 individual cases, a Chapter 11 filing can allow you to restructure debt, catch up on debts with secured creditors, and even prevent foreclosure of your home. To find out more about your eligibility for Chapter 13 bankruptcy and your options for a Chapter 13 or Chapter 11 reorganization bankruptcy in Florida, you should get in touch with an experienced West Palm Beach bankruptcy lawyer at Kelley Kaplan Delaney & Eller, PLLC. Contact our firm today for assistance.

Source:

uscourts.gov/court-programs/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics