Chapter 11 also concerns reorganization of your debts--that is, payments over a period of time--which is similar to Chapter 13. Chapter 11 is used by those persons who have too many debts to qualify for a Chapter 13. Chapter 11 is more complex, but it can offer greater flexibility.
Note that under Chapter 11 there are various accounting records which must be submitted to the Office of the United States Trustee during the bankruptcy. You will need the assistance of an accountant to prepare those forms.
It empowers the debtor in possession to extend the term of the payment, and also could to change the principal and interest on a debt, something that debtor could not achieve in Chapter 7 and Chapter 13 bankruptcy. However, Chapter 11 bankruptcy is expensive with the filing fee of $1717 ($1,167 case filing fee and a $550 miscellaneous administrative fee) and hourly attorney rate.
The process of filing Chapter 11 Bankruptcy starts way before filing the petition and involves gathering all financial data of the debtor (business or individual) for past three years. Thereafter, a plan for repayment with specific goals in mind to benefit the debtor shall be prepared. The goal of Chapter 11 is to decrease the amount of money the debtor owes. For example if the debtor owes $500,000 and the value of his asset is no more than $200,000, the plan shall be proposed to pay only $200,000 to creditors.
The goal of Chapter 11 plan is to give time to Debtor to become profitable by renegotiating its debt. A debtor can negotiate the lease, contract, mortgage, and other credit card debts, and either have the debts discharge or pay partially through the proposed plan.
The Chapter 11 bankruptcy for small Businesses is much faster and therefore much cheaper. A small business must be engage in commercial or business activities like services and trades with total of non-contingent liquidated debts of $2,490,925 or less.
In a small business case, the debtor must attach the most recent prepared balance sheet, cash-flow statement, statement of operation, filed tax return within two weeks after filing the petition. Trustee office will file a motion to dismiss the case or convert it to bankruptcy Chapter 7 if debtor fails to provide these documents within the time allowed.