In the United States, an individual or entity may file for bankruptcy to obtain relief from debts.

The most common type of bankruptcy is liquidation under chapter 7 of the Code, which applies to both individual and corporate debtors.

Alternatively, an individual who earns regular income and whose income is less than a specified annual maximum may instead choose to file a chapter 13 case, under which the individual agrees to repay all or a portion of his or her debts under a repayment plan approved by the bankruptcy court.

Sheldon Toibb, an individual in financial distress, filed a chapter 7 bankruptcy petition in Missouri.

The bankruptcy court initially granted the motion, but later ordered Toibb "to show cause why his petition should not be dismissed because petitioner was not engaged in business and, therefore, did not qualify as a chapter 11 debtor.

[7] The bankruptcy court rejected these arguments based on Eighth Circuit precedent and [8] held that Toibb "failed to qualify for relief under Chapter 11.

"[15] Turning to the legislative history of the then-current version of the Bankruptcy Code, the Court acknowledged that a Senate report showed that Congress anticipated that businesses would be the most common parties to file under chapter 11.

Nonetheless, Stevens disagreed with the Court's conclusion, opining that chapter 11 of the Bankruptcy Code was intended to apply to business debtors only.

[19] Turning to legislative history to resolve this ambiguity, Stevens agreed that the Senate Report assumes that only businesses would ever file under chapter 11.

Toibb stands for the counterintuitive proposition that individuals can file for chapter 11 "reorganization" under the Bankruptcy Code.