11 USC § 109: Who May Be a Debtor in Bankruptcy

Under 11 U.S.C. § 109, who can file for bankruptcy depends on two things: whether you have the required connection to the United States, and whether you meet the specific rules for the chapter you want to use. Almost any individual, partnership, or corporation with a residence, domicile, place of business, or property in the U.S. can file something, but Chapter 7, 11, 12, 13, and 9 each impose their own eligibility screens on top of that baseline.¹

The U.S. Connection Every Debtor Needs

Section 109(a) sets a low bar. You qualify if you have a residence, a domicile, a place of business, or property in the United States. Any one is enough. A foreign national with a U.S. bank account meets the test. A company headquartered abroad but operating a warehouse in Texas meets it too.¹

The statute speaks of a “person,” which under 11 U.S.C. § 101(41) means individuals, partnerships, and corporations. Governmental units are not persons for this purpose, with narrow exceptions for entities holding certain pension-related assets.² Municipalities have a separate path under Section 109(c), covered further down.

Chapter 7 Liquidation

Chapter 7 is the most common filing, but Section 109(b) locks certain organizations out. Railroads cannot file Chapter 7. Neither can domestic insurance companies, nor banks and credit unions that are insured depository institutions. Foreign insurance companies and foreign banks operating U.S. branches are also excluded.¹ Each of these industries has a separate insolvency framework outside the Bankruptcy Code.

Individuals face an extra screen. Under 11 U.S.C. § 707(b), the court applies a means test to decide whether an above-median-income filer’s Chapter 7 case should be presumed abusive. If your annualized six-month household income is at or below your state’s median for a household of your size, the means test does not apply and you can proceed. If your income is higher, the court subtracts allowed expenses from monthly income and multiplies the remainder by 60. A presumption of abuse arises when the result exceeds the lesser of 25 percent of your unsecured debts (with a floor of $10,275) or $17,150.³ The presumption can be rebutted with evidence of special circumstances, but most filers who fail the means test end up in Chapter 13.

Chapter 13 Repayment Plans

Chapter 13 is reserved for individuals with regular income who want to repay debts over three to five years. Corporations and partnerships cannot use it. Stockbrokers and commodity brokers are also excluded regardless of their debt levels.¹

Debt caps apply. From April 1, 2025 through March 31, 2028, your noncontingent, liquidated unsecured debts must be below $526,700, and your noncontingent, liquidated secured debts must be below $1,580,125.⁴ Married couples filing jointly combine their debts against these ceilings. Only debts that are fixed in amount and not dependent on some future event count; a pending lawsuit against you, for example, is contingent and unliquidated, so it stays out of the calculation.

The numbers moved recently. The Bankruptcy Threshold Adjustment and Technical Corrections Act had temporarily raised the Chapter 13 ceiling to $2,750,000 in combined debt, with no separate secured and unsecured categories. That expansion sunsetted on June 21, 2024, and the old two-part test returned. The current figures reflect the three-year inflation adjustment under 11 U.S.C. § 104, which updates dollar thresholds every three years on April 1 using the Consumer Price Index.⁵

Chapter 11 Reorganization

Chapter 11 has the fewest gates. Under Section 109(d), anyone eligible for Chapter 7 is eligible for Chapter 11, with two adjustments: stockbrokers and commodity brokers are barred, and railroads (excluded from Chapter 7) can file Chapter 11.¹ There are no debt ceilings in standard Chapter 11, which makes it the default for individuals who exceed the Chapter 13 limits and for businesses of any size.

Subchapter V for Small Businesses

Subchapter V is a streamlined, less expensive Chapter 11 track for small business debtors. A business or an individual engaged in commercial activity qualifies if total noncontingent, liquidated debts (secured and unsecured, excluding debts owed to affiliates or insiders) fall under the current threshold, and at least half of those debts arise from business activity. After the BTATCA expansion sunset on June 21, 2024, the ceiling reverted to the original Small Business Reorganization Act figure as adjusted for inflation.⁶ Subchapter V drops the creditors’ committee and keeps the debtor in control of proposing the plan, which cuts costs sharply versus a standard Chapter 11 case.

Chapter 12 for Family Farmers and Fishermen

Chapter 12 is built around the seasonal income of farming and commercial fishing. To qualify, an individual or married couple must earn more than 50 percent of gross income from farming or fishing operations. The look-back differs by occupation: farmers are measured against the prior tax year and against the second and third prior tax years; for fishermen, only the preceding tax year matters.⁷

Debt limits are far higher than Chapter 13’s and combine secured and unsecured obligations. A family farmer’s total debts cannot exceed $12,562,250. A family fisherman’s total debts cannot exceed $2,568,000.⁷ For farmers, at least 50 percent of total debt, excluding the debt on a primary residence, must come from the farming operation. Corporations and partnerships can also qualify if the farming or fishing family holds a majority ownership interest.

Chapter 9 for Municipalities

Cities, counties, school districts, and public utilities file under Chapter 9, and Section 109(c) sets the strictest eligibility rules in the code. A municipality must satisfy all four of the following:

State authorization. The municipality must be specifically authorized by state law, or by a state-empowered official, to be a Chapter 9 debtor. Without it the filing is dead on arrival. Roughly half the states have some form of authorization statute, and the specifics vary widely.
Insolvency. The municipality must be unable to pay its debts as they come due.
Desire to adjust debts. The municipality must genuinely intend to restructure its obligations through a plan.
Creditor engagement. The municipality must have obtained agreement from a majority of its creditors, negotiated in good faith and failed, been unable to negotiate because doing so would be impractical, or reasonably believed a creditor was about to attempt a preferential transfer.

These conditions reflect the line between federal bankruptcy authority and state sovereignty; a state must consent before its municipalities can be pulled into federal court.¹

The Credit Counseling Requirement for Individuals

Every individual filing bankruptcy must complete a credit counseling briefing during the 180 days before filing the petition. The briefing must come from a nonprofit agency approved by the U.S. Trustee’s office and can be completed by phone or online. The agency reviews your finances and discusses whether a debt management plan could work instead of bankruptcy. You receive a certificate of completion, which must accompany your petition, or the court will dismiss the case.¹

If a genuine emergency prevents pre-filing counseling, you can seek a temporary exemption by filing a certification with your petition. You have to show you contacted an approved agency but could not obtain the briefing within seven days, and that emergency circumstances justified filing without it. Courts may grant up to 30 days to complete the requirement, and in some cases an additional 15 days for cause.⁸ Permanent exemptions are narrow: incapacity from mental illness, disability, or active military duty in a combat zone.¹

When a Prior Dismissal Blocks a New Filing

Section 109(g) bars an individual or family farmer from filing a new case for 180 days after a prior case was dismissed under either of two circumstances. The first is dismissal because the debtor willfully disobeyed court orders or failed to appear as required. The second is voluntary dismissal after a creditor had already filed a motion for relief from the automatic stay.¹

The second scenario targets a specific pattern. Some debtors file mainly to trigger the automatic stay and halt a foreclosure or collection. When the creditor moves to lift the stay, the debtor dismisses and refiles to reset the stay. Section 109(g) closes that loop for six months.

1
Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor
2
Office of the Law Revision Counsel. 11 USC 101 – Definitions
3
Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
4
United States Courts. Chapter 13 – Bankruptcy Basics
5
Office of the Law Revision Counsel. 11 USC 104 – Adjustment of Dollar Amounts
6
Department of Justice. Subchapter V – U.S. Trustee Program
7
United States Courts. Chapter 12 – Bankruptcy Basics
8
United States Bankruptcy Court District of Columbia. Notice to All Debtors About Prepetition Credit Counseling Requirement