Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about Chapter 11 Bankruptcy and other Bankruptcy topics.
Any legal partnership, corporation, individual, or LLC is permitted to file under Chapter 11, although many smaller and medium-sized businesses have chosen to file in state courts (where possible) in recent years. It is usually too expensive for a small, unincorporated business to file for Chapter 11 protection. It is much less costly for the small businessperson to file a Chapter 13 personal petition to reorganize his/her debt payments. State court filings tend to be less expensive and often result in a much faster hearing and disposition than federal bankruptcy court proceedings. A business in cash flow or debt trouble can benefit greatly from the speed of receiving protection from creditor actions.