Individuals With Above-Median Income And Debts Above Statutory Limits
Although most individuals who file for bankruptcy in Arizona do so under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code, Chapter 11 is also available to individuals. Indeed, individuals may choose a Chapter 11 bankruptcy because they need bankruptcy relief and are not eligible for a Chapter 7 or Chapter 13 bankruptcy.
Individuals with above-median income and primarily consumer debt are often not eligible for a Chapter 7 bankruptcy. The only bankruptcy options would then be a Chapter 13 or a Chapter 11 case. However, individuals with more than $360,475 in unsecured debt or more than $1,081,400 in secured debt are not eligible for a Chapter 13 bankruptcy. (These figures will be adjusted April 1, 2013.)
Because of these limits, Chapter 11 provides the only bankruptcy protection available to some individuals. Others may be eligible to choose between liquidating their non-exempt assets under Chapter 7 and reorganization under Chapter 11.
A Chapter 11 case allows individuals to create a plan by which they can repay a portion of what they owe without liquidating their assets. The amount individuals must repay is limited to their disposable income for a five year period. Unlike a Chapter 13 case, an individual may choose to pay their disposable income over a period of time longer than five years which, in the right case, can be better for both the debtor and the creditors.
Chapter 11 may provide the best way for high-income professionals to regain control of their finances. Once individuals file for Chapter 11 bankruptcy in Arizona, their assets gain the protection of the bankruptcy court. This may allow them to recuperate financially and make the entire ordeal a thing of the past.
To determine whether a Chapter 11 bankruptcy case is a good fit for your situation, you should speak with a local bankruptcy attorney who handles Chapter 11 cases. Ask whether relief is available under Chapter 7, Chapter 11, or Chapter 13, and whether each is a good option for your situation.
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