Debtors who would rather remain in business and avoid liquidation should consider filing a petition under Chapter 11 of the Bankruptcy Code. Under Chapter 11, the debtor can seek a modification of debts, either by extending the time for repayment or by debt reduction.
An individual debtor with a regular income may seek an adjustment of debts under chapter 13 of the Bankruptcy Code. Chapter 13 provides individual debtors with an opportunity to save their home from foreclosure; allowing them to “catch up” on past due payments through a payment plan.
Out-of-court agreements with creditors or debt counseling services may also provide alternatives to filing bankruptcy.