As an individual interested in bankruptcy, you typically turn your attention to Chapter 7 and Chapter 13. While this may be true, there is another option to consider: Chapter 11 bankruptcy.

This form of bankruptcy is available to both businesses and individuals. While it is typically for corporations or partnerships seeking reorganization, there are times when it makes sense for an individual to consider the benefits.

Also known as a reorganization bankruptcy, Chapter 11 gives a company or person the ability to reorganize their debt and pay back creditors over a specified period of time.

As an individual, there are things you need to know about Chapter 11 bankruptcy. For example, you are not eligible to file if during the preceding 180 days a bankruptcy petition was dismissed due to not complying with court orders or failure to appear before the court.

It is also important to note that you are unable to file for Chapter 11 bankruptcy unless you have received credit counseling within 180 days leading up to the filing.

You don’t often see individuals file for this form of bankruptcy, as Chapter 7 and Chapter 13 are usually a better option. Even so, when you are in a bad financial position, you don’t want to overlook anything that could yield positive results.

Once you learn more about Chapter 11 bankruptcy and once you compare this type to others, you will have a better understanding of what to do next. As an individual, you owe it to yourself to compare and contrast each form of bankruptcy, as this is the only way to make an informed and confident decision.

Source: United States Courts, “Chapter 11 – Bankruptcy Basics,” accessed Nov. 12, 2015