Any of our Escondido readers familiar with previous posts here know that businesses that are facing tough financial situations may consider filing for bankruptcy protection. Even though filing for bankruptcy is usually billed as the "beginning of the end" for a business in the media portrayals, the fact of the matter is that Chapter 11 bankruptcy - one form of bankruptcy most commonly associated with businesses - is intended to help the company turn things around and remain in business. Seeing an individual file under Chapter 11, however, is unusual.
Vince Young, a former NFL quarterback and Offensive Rookie of the Year, recently filed for bankruptcy under Chapter 11. Young most recently played for the Green Bay Packers in early preseason games, but was out of football for the rest of the regular season last year. It appears that his lack of success on the football field is having a negative impact on his finances, but the fact that he has filed for bankruptcy under Chapter 11 has raised some eyebrows.
Most of the time, an individual who files for bankruptcy will file under Chapter 7 or 13. Chapter 13 is somewhat similar to Chapter 11 in that it gives an individual a chance to reorganize and come to terms with creditors and work out a way to pay back debts owed over several years. Chapter 7, as most people know, is a liquidation process whereby the filer's assets are sold and the proceeds applied toward paying off their debts. Young decided to file under Chapter 11 though, which actually could give him a bit more control over the process.
Young's case just goes to show that there are many different factors to consider when trying to determine whether or not to file for bankruptcy, both for businesses and individuals. For a business looking to make the necessary changes and stay in operation, however, Chapter 11 is usually the way to go.
Source: The Huffington Post, "Vince Young Files For Chapter 11 Bankruptcy," Jan. 22, 2014