Is Chapter 11 my best option for bankruptcy as a sole proprietor?

Chapter 11 bankruptcy is usually not going to be a viable option for a sole proprietor for a number of different reasons:

• First, as a sole proprietor, you and your business are going to be treated as the same legal entity under the law

This means if your business declares bankruptcy, you are declaring bankruptcy. This is, therefore, more of a personal bankruptcy than a corporate or business bankruptcy and the options of either chapter 7 or chapter 13 are going to be more appropriate for your situation. Of course, this means your personal assets or personal income will be looked at in a chapter 7 or chapter 13 filing, but filing a chapter 11 would not prevent that from happening. 

• Second, chapter 11 is very expensive

Chapter 11 is a highly complex form of bankruptcy that allows a business to continue business operations, often under the oversight of a trustee, while restructuring the debts that the corporation or company owes. There are required payment plans and various other legal requirements that are imposed in a chapter 11, all of which add up together to make this a costly form of bankruptcy. It is most often used by large corporations for whom it makes sense to pay these hefty costs to remain operational; sometimes, a large business or corporation can operate for years while in chapter 11. 

If you are confused about which chapter of bankruptcy is right for you or about how you can best eliminate your debts and protect your finances, it is in your best interests to speak with a qualified lawyer for help.