Eligibility for Chapter 11 Bankruptcy in Florida

Chapter 11 bankruptcy is a complex process primarily designed for businesses seeking to reorganize their debts while continuing operations. However, individuals can also file for Chapter 11 under certain circumstances. Understanding the eligibility requirements is crucial for anyone considering this option in Florida.

To qualify for Chapter 11 bankruptcy in Florida, the debtor must meet specific criteria outlined by federal law. Here are the key eligibility requirements:

1. Type of Debtor

Both individuals and businesses can file for Chapter 11. For individuals, it’s essential that their debts exceed the limits set for Chapter 13 filings, which is a maximum of approximately $494,000 for unsecured debts and $1,100,000 for secured debts as of 2023. If individuals have debts larger than these limits, Chapter 11 may be a viable option.

2. Ability to Repay Debts

Another crucial eligibility factor is the debtor's ability to produce a feasible repayment plan. Under Chapter 11, the debtor must propose a plan that outlines how they intend to pay back creditors, which should be reasonable and feasible based on the debtor's current financial circumstances.

3. Good Faith Filing

Eligibility also requires that the bankruptcy be filed in good faith. This means that the debtor should not be filing to delay creditor actions or to mislead them. A transparent and honest approach to the bankruptcy process is essential for approval.

4. No Prior Discharge

Individuals who previously had a Chapter 11 discharge must wait a specific time frame before filing again. Generally, a debtor cannot have a bankruptcy discharge if they had a Chapter 11 case dismissed within the past 180 days for failing to comply with court orders or for filing in bad faith.

5. Recent Financial History

Florida debtors must review their financial history. They should disclose all debts, assets, income, and expenses accurately in the bankruptcy filings. Failing to provide accurate and complete information can lead to a dismissal of the case.

6. Credit Counseling

Before filing for Chapter 11, debtors must complete a credit counseling session with an approved agency within the 180 days prior to filing. The counseling helps assess financial situations and explore options other than bankruptcy.

7. Filing Fees

Debtors must be prepared to pay the necessary filing fees associated with Chapter 11. In Florida, this fee can be significant, and if the individual cannot afford it, they may apply for a fee waiver or request to pay in installments.

Conclusion

In summary, filing for Chapter 11 bankruptcy in Florida requires meeting specific eligibility criteria, including the type of debtor, ability to repay debts, good faith filing, and compliance with financial disclosure requirements. Individuals or businesses looking to pursue this route should consult with a qualified bankruptcy attorney to navigate the complexities of the process effectively.