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Chapter 11 an option for individual bankruptcy, though uncommon

Last week our Wayne County bankruptcy law blog discussed the Chapter 11 filing of a well-known business. Many businesses choose Chapter 11 because it allows them to pursue a plan to return to profitability post-bankruptcy; they use the debt relief and the automatic stay under Chapter 11 in order to reorganize. Although uncommon, Chapter 11 is actually an option for some individuals as well.

For example, television and film star Mekhi Phifer recent filed for Chapter 11. Wayne County residents may remember Phifer from his stint on the show ER, as well as from the film Divergent. The actor's Chapter 11 filing lists over $1 million in debts -- almost all of it back taxes -- and assets of just over $65,000, including some guns, leather furniture and a Segway. He claims $7,500 per month in earnings with expenses of over $11,000.

Unfortunately, all too many Michiganders will be familiar with this scenario: a sizable gap between monthly expenses and monthly income, and unpaid bills accumulating. Phifer has taken the uncommon route of filing for Chapter 11, perhaps because, as a celebrity with a role in a current hit movie series, he has good reason to expect his earnings will continue to be strong. Just like struggling businesses, individuals may be able to take advantage of Chapter 11's manageable payments and automatic stay in order to start over fresh.

Chapter 7 bankruptcy and Chapter 13 bankruptcy are much more common in cases of individual bankruptcy, but there are other options too, as Phifer's case demonstrates. A legal professional can help evaluate an individual consumer's situation and advise on what steps might be available moving forward.

Source: People, "Mekhi Phifer Files for Bankruptcy," Andrea Billups, May 7, 2014

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