Chapter 11, which allows for reorganization and creates a plan to pay creditors over an extended period of time, is usually filed by corporations or partnerships that have fallen into debt. Some individuals, though, may take advantage of Chapter 11 bankruptcy.
In addition to the protections of Chapter 11, many individuals file for Chapter 7 or Chapter 13 bankruptcy, which offer unique forms of debt relief for people looking to restore their financial health. Each chapter offers unique advantages for different situations
Cases filed under Chapter 11 of the United States Bankruptcy Code are usually referred to as "reorganization" plans. In brief, here is how Chapter 11 works:
While it is primarily designed for businesses, Chapter 11 is sometimes used by individual filers. It may, however, prove less helpful than Chapter 7 or Chapter 13 bankruptcy. The benefits of these strategies are explained below.
While you may be considering filing for Chapter 11, your bankruptcy attorney may advise that you instead opt for Chapter 7, which is also used by corporations, or Chapter 13, which is a form of reorganization expressly designed for individual filers.
In Chapter 7 bankruptcy, which is usually reserved for filers with limited income, you may be able to eliminate some or all of your unsecured debts, including:
On the other hand, Chapter 13 offers debt relief for filers with steady incomes who are looking to keep valuable possessions during the bankruptcy process.
During Chapter 13, you will be able to consolidate your debts into a single repayment plan. Then, you will make monthly payments to a bankruptcy trustee who deals with your creditors so you can continue to live as you normally do.
By filing for Chapter 13 bankruptcy, you may be able to tackle your debts while stopping home foreclosure proceedings, or saving your car from the pains of repossession.
However, there is a limit to the total amount of secured and unsecured debts that can be included in a Chapter 13 filing. Individuals whose debts exceed these limits, such as those with multiple homes, may instead decide to file Chapter 11, which creates a similar reorganization of debts without any preset limits on debts.
Under all forms of personal bankruptcy, you will also receive the benefits of the automatic stay, which silences creditors while you work on settling your debts. The automatic stay prevents harassing calls and letter, and gives you peace of mind as you recover your financial health.
Disclaimer: The information provided on this site is not legal advice, does not constitute a lawyer referral service, and no attorney-client or confidential relationship is or should be formed by use of the site. The attorney listings on the site are paid attorney advertisements. Your access of/to and use of this site is subject to additional Supplemental Terms.