The Difference between Chapter 11 & Chapter 13 Bankruptcy

: Chris Lee Law Firm

  Filed under: Bankruptcy

types of bankruptcyChapter 11 and Chapter 13 are both forms of bankruptcy that deal with debt reorganization.  If you’re earning an income, but it’s not quite enough to pay off all of the burdensome debts you currently carry, debt restructuring through the bankruptcy process is something that could be very valuable for you.  However, individuals filing for this type of bankruptcy rarely use Chapter 11.  Instead, Chapter 13 is the far more popular alternative.  Here’s a brief explanation of why Chapter 13 is the more popular form of bankruptcy for individuals.

Chapter 11 v. Chapter 13

One reason that Chapter 13 is so much more popular is that under this type of bankruptcy, whatever plan you create with your attorney must be accepted by your creditors (as long as it is met with the approval of a judge).  However, plans that are submitted to creditors via Chapter 11 are subject to a vote that the creditors cast.  Filing for Chapter 11 bankruptcy, your proposal might not be accepted by your creditors.  Choosing Chapter 13 can eliminate the hassle of a back-and-forth argument.

Furthermore, Chapter 11 typically deals with very large amounts of debt.  It’s almost certain that your bankruptcy case fits within the parameters of Chapter 13, a much easier process with far fewer legal complications.  Because Chapter 11 deals with larger debts, it’s usually the preferred choice of businesses and individuals with large assets.


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