Personal Bankruptcy Chapter 11
Also known as a reorganization bankruptcy, a Chapter 11 personal bankruptcy is a type of bankruptcy that includes the reorganization of the assets, debts, and business affairs of a debtor.
Named after United States bankruptcy code 11, individuals typically file Chapter 11 with a Chapter 11 bankruptcy attorney if they need time to restructure their debts. This form of bankruptcy offers the debtor a fresh start, but the terms depend on the debtor’s fulfillment of the responsibilities of the bankruptcy under the reorganization plan.
How Chapter 11 personal bankruptcy with a Chapter 11 bankruptcy attorney works
Chapter 11 personal bankruptcy is considered the most complicated bankruptcy case, and it’s also typically the most pricey type of bankruptcy proceeding. So if you are considering a Chapter 11 personal bankruptcy, then you should carefully explore and analyze all of your other options first.
During a Chapter 11 personal bankruptcy proceeding with a Chapter 11 bankruptcy attorney, the bankruptcy court will help an individual restructure their obligations and debts. There are many cases where people with a ton of debt who don’t qualify for a Chapter 7 personal bankruptcy or Chapter 13 personal bankruptcy can qualify for a Chapter 11 personal bankruptcy. That being said, it’s important to keep in mind that the Chapter 11 personal bankruptcy process is not particularly quick.
With a Chapter 11 personal bankruptcy, the person filing bankruptcy has the first opportunity to create and propose a reorganization plan. This plan could include liquidating all of your assets in order to pay back your creditors. The bankruptcy court will most likely accept your plan, as long as it is considered fair and feasible, and the process can then move forward.
The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, was signed into law on March 27, 2020 by the president. The act increased the Chapter 11 subchapter V debt maximum or limit to $7.5 million. The act applies to any Chapter 11 bankruptcies filed after the act was enacted and any sunsets one year after the act was enacted.
Frequently asked questions about Chapter 11 personal bankruptcy
Here are the most frequently asked questions and answers about Chapter 11 personal bankruptcy:
What are the chapters of the United States bankruptcy code?
There are six main chapters in the United States bankruptcy code, and each of these chapters goes over different parts of the bankruptcy process. Chapter 7 is known as a liquidation bankruptcy, while Chapter 9 is for municipalities and Chapter 11 is all about reorganization for individuals or businesses.
Chapter 12 is about family farmers, while Chapter 13 is all about repayment options and Chapter 15 is about international bankruptcies. Chapter 7, Chapter 11, and Chapter 13 are the most popular bankruptcy options.
What is the difference between a Chapter 7 bankruptcy and a Chapter 11 bankruptcy?
Also known as a liquidation bankruptcy, Chapter 7 bankruptcy is a kind of bankruptcy that can clear away several different kinds of unsecured debts. If you are pretty far behind on paying your bills and are financially unable to afford your living expenses and monthly expenses, then filing your Chapter 7 bankruptcy can be your last resort to help you settle your finances.
The court puts an automatic temporary stay on your current debts when you file for Chapter 7 personal bankruptcy. This automatic temporary stay keeps creditors from garnishing your wages, collecting payments, repossessing property, foreclosing on your home, turning off your utilities or evicting you.
The court will then legally possess your property and select a bankruptcy trustee to oversee your bankruptcy case. Your unsecured debt, including credit card debt, is typically erased during the Chapter 7 bankruptcy process, but it doesn’t forgive any student loans or taxes that are owed. Also, you are allowed to keep any exempt property.
The role of the trustee is to review your assets and finances and oversee your Chapter 7 bankruptcy case. The trustee will sell specific property that the bankruptcy won’t let you keep, known as nonexempt property, and use the proceeds of the sale to pay back your creditors.
They will also arrange and run a meeting between you and your creditors, known as a creditor meeting. During this meeting you go to the courthouse and answer questions about your bankruptcy filing.
A Chapter 11 bankruptcy, on the other hand, is a reorganization bankruptcy and involves reorganizing your assets, debts, and business affairs. The main difference between these two types of bankruptcies is that the individual is not required to liquidate their assets with Chapter 11 and they remain in control of their operations.
Are there any benefits to filing a Chapter 11 bankruptcy?
One of the biggest benefits of filing a Chapter 11 bankruptcy is that the individual or business entity can remain in control of their operations while developing their reorganization plan and going through the process of reorganizing. This allows individuals and businesses to generate cash flow that can help with the process of repayment.
The bankruptcy court will also issue an order to help keep creditors from going after the individual or business during the reorganization process. Most creditors tend to be very receptive to Chapter 11 bankruptcies, since these bankruptcies can help them recoup most if not all of their money during the process of reorganization and repayment.
What are the top drawbacks of filing a Chapter 11 bankruptcy?
Chapter 11 bankruptcy is the most complicated of all of the various types of bankruptcy, and it can be very expensive as well, especially for bankruptcy court proceedings. If you are struggling to the point where you need to file for bankruptcy, the legal costs alone of a Chapter 11 bankruptcy might be too much for you to manage.
Also, the reorganization plan and process needs to be approved by the bankruptcy court, and the plan needs to be manageable enough, so that you can reasonably pay back all of your debt over the time allotted. That’s why you should make sure to carefully explore and analyze all of your other options before deciding to go with a Chapter 11 reorganization bankruptcy.
We recommend speaking to a Chapter 11 bankruptcy attorney like the Van Horn Law Group to learn more about filing a Chapter 11 bankruptcy.
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