The Covid-19 pandemic has caused a significant economic downturn worldwide, affecting numerous businesses. Unfortunately, some New Jersey companies have closed their doors permanently, and others are facing substantial financial difficulties. Yet, for many small business owners, entrepreneurs, and individuals, chapter 11 bankruptcy could be the answer they need to reorganize and regain financial stability. But is chapter 11 bankruptcy only for businesses? Can individuals file, too? Who is eligible, and what are the requirements? In this post, we will answer these questions.

Chapter 11 bankruptcy is a reorganization plan designed to provide relief to those experiencing financial difficulties. An individual or business can use chapter 11 to reorganize and restructure their finances to improve profitability and repay creditors. Small businesses and entrepreneurs find chapter 11 reorganizing appealing as they can significantly reduce debt, change interest rates or terms of repayment, or liquidate their assets.

While chapter 11 is well-known for business reorganizations, individuals may also file for chapter 11 bankruptcy. Individuals file Chapter 11 if they have too many assets to qualify for Chapter 13 relief or when they have debts exceeding Chapter 13 limits. Since Chapter 11 is typically tailored to businesses and more complex than Chapter 7 or 13, it is usually costlier and more time-consuming. 

Individuals must meet the requirements to file for chapter 11 bankruptcy in New Jersey. These requirements include a detailed disclosure statement and a reorganization plan. The disclosure statement needs to provide information about the debtor's current financial position, including account statements, financial forecasts, and recent transactions. The reorganization plan needs to outline how the debtor will repay its creditors over a reasonable period. After the debtor files and submits the statement and plan, the court will review and approve or reject them.

One of the challenging aspects of chapter 11 bankruptcy is that creditors may challenge the debtor’s reorganization plan in court. The court may approve the plan only when the creditors are satisfied that the debtor can repay them. An experienced Chapter 11 lawyer can help you navigate these challenges and ensure a smooth reorganization process.

The process of filing for chapter 11 bankruptcy is typically complicated and requires several steps. It is important to work with a competent and experienced bankruptcy attorney who has significant experience with chapter 11 cases. They can help you understand the process, prepare the documentation, and defend your interests in court. Your attorney can also help you identify your critical assets, determine which assets to sell or keep, and help you restructure debt.

Chapter 11 bankruptcy is available to both businesses and individuals in New Jersey who need to restructure and repay their debts. While it is usually more complex than other bankruptcy options, it provides numerous benefits, such as reduced debt, interest rate changes, and asset liquidation. If you're considering filing for chapter 11 bankruptcy, ensure you work with the right attorney to walk you through the process and overcome the challenges. With their guidance, you can improve your financial position and regain stability.