Should I file Chapter 11 or 13 bankruptcy?

Going through bankruptcy in Pennsylvania is stressful no matter how you are doing it, but one of the most important decisions you will make throughout the entire process is the type of bankruptcy to file. If you are going through bankruptcy, you may need to make a decision between filing Chapter 11 and Chapter 13. According to the US Courts, unlike a Chapter 13 bankruptcy, a Chapter 11 bankruptcy is often referred to as a reorganization bankruptcy.

One of the main differences between a Chapter 11 and Chapter 13 bankruptcy is that Chapter 11 bankruptcies allow for either individuals or businesses to file. On the other hand, a Chapter 13 bankruptcy may only be filed by individuals or sole proprietors. Corporations or limited liability companies may not file for a Chapter 13 bankruptcy because they are considered a different type of legal entity.

Essentially, the main reason to choose a Chapter 11 bankruptcy is that you do not qualify for a Chapter 13. Again, the majority of businesses will not qualify for a Chapter 13. Additionally, some individuals who have debts that exceed the ceiling allowed for a Chapter 13 bankruptcy will then need to file Chapter 11. If you are a small business owner, you may find the streamlined nature of Chapter 11 procedures to be helpful.

Overall, a Chapter 13 bankruptcy is also cheaper than a Chapter 11 bankruptcy. The filing fee for a Chapter 11 bankruptcy is higher than that of Chapter 13. Additionally, a Chapter 11 bankruptcy is usually more work than a Chapter 13 due to the length of a Chapter 11 plan.