What is the difference between Chapter 11 vs. a Chapter 7 or 13?

In many ways a Chapter 11 is similar to a Chapter 13. In a Chapter 11 you do not have to give up your personal property and worry about liquidation (as in a 7). Both individuals and businesses use Chapter 11 in order to reorganize their debts. It is available to individuals, partnerships and corporations. Consumers can use Chapter 11 when they do not qualify for a Chapter 7 or 13. Further, a Chapter 11 plan can be longer than that of a Chapter 13 which is restricted to 60 months or 5 years.

Why would I file for a Chapter 11 instead of a 7 or 13?

If your income is too high to allow you to qualify for a Chapter 7 and you cannot file for a Chapter 13 because your debts are too high then a Chapter 11 may be for you.

If you are a business and are in financial trouble then a Chapter 11 may be for you. If a company is in financial trouble and they need to take control of their debts in order to survive then Chapter 11 may work. With a Chapter 11 a company can reorganize their business in order to place themselves in a better position. Chapter 11 involves either reorganization or liquidation. With the confirmation of a plan a debtor can extend or even reduce its debts, continue its business and provide for shareholders and investors.

I have a home and I am behind in payments, foreclosure has been threatened and my lender is refusing to deal with me, what can Chapter 11 do for me?

Once you file a Chapter 11 bankruptcy, just like a Chapter 7 or 13, an automatic stay begins. A creditor cannot foreclose or otherwise take any steps to collect from you unless the Court gives permission (grants a relief from the stay). Once you file you will be expected to begin making your payments again. With respect to your arrears, a reorganization plan will have to be designed to enable you to pay. In essence, your lender will have to work with you (or your attorney) as you will have the ability to make payments again.

What are the Qualifications for a Chapter 11?

It is available regardless of whether you have assets and there is no minimum debt requirement.

How long does a Chapter 11 take?

A Chapter 11 can be less than 3 years and more than 6 years. It all depends on the case and the needs of the individual consumer or business.

What are the procedures for a Chapter 11?

First, we need to meet with you as soon as possible. A chapter 11 is all about planning. A perfect Chapter 11 is one that is planned out before filing. There are companies that have filed a Chapter 11 and were in and out in less than a year. That took quite a bit of planning before they even filed!

Second, we need all of your information. This includes all of your personal and business assets, debts, liabilities, properties, income, expenses, etc.
Next, we file your case. After the filing, there are many filings, meetings and possible hearings. It is our responsibility to make it as easy on you as we can.

If you are a business or individual not eligible for a Chapter 13 or 7 then perhaps a Chapter 11 is for you. Chapter 11 cases are difficult and complex and you will absolutely need an attorney to assist you.

For further information on filing a Chapter 11, or any type of bankruptcy, contact The SOS Law Group.

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