Debtors should consider filing a petition under chapter 11 of the Bankruptcy Code. Under chapter 11, the debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization.Sole proprietorships may also be eligible for relief under chapter 13 of the Bankruptcy Code.

A Chapter 11 filing is generally a voluntary action taken by a company to protect its ongoing business from financial claims while it continues operating its business. During a Chapter 11 proceeding, the company reorganizes financially and, at times, operationally so that it can meet the claims of those to whom it owes money. A Chapter 11 filing includes an automatic stay that immediately freezes all claims against the company that predate the filing, stops all lawsuits against the company, and precludes creditors from exercising control over the company’s property. Chapter 11 reorganization is entirely different from other kinds of bankruptcy proceedings where the focus is on liquidating the company. Companies commonly file for Chapter 11 voluntarily because it provides a process for the company to restructure and to emerge as a viable business.