When you choose to file bankruptcy, the first step you have to take is to decide which type of bankruptcy to file. This decision depends on your financial circumstances.
Chapter 11 and 13 may seem very similar, and they do have some similarities. You may choose to file a Chapter 11 if you want to reorganize your debt. Chapter 13 is a repayment plan, which is similar but has key differences.
The U.S. Department of Justice explains this type of bankruptcy is most common for businesses, but you may file it as an individual. It allows you to keep operating a business normally while in bankruptcy. You will create a reorganization plan, which is a plan to repay your creditors. You may repay debts in full or only pay part of them to satisfy your plan.
This type of bankruptcy is more for individuals. Like Chapter 11, you will create a repayment plan to pay back your debts. You will also get some protection for your assets. There is a limit on the amount of debt you can have to file under this chapter, which is why you may have to file Chapter 11 instead.
Making a choice
If your debts mainly come from business, you will probably want to file a Chapter 11. This is also true if your debts exceed the amount allowed by the law for Chapter 13. However, if you do not have a lot of business debt and your debt is within the limits, you may be better off filing a Chapter 13.