Debt can be a terrible thing and you might even feel like you are limited in what you can do due to your debt, and you might be right. Being in debt can be very limiting, but the good news is that there is a way out of debt. Bankruptcy is an excellent tool to be used to help people get out of debt, even though some people simply refuse to file for bankruptcy for fear of looking like a failure, but sometimes it is better to get a fresh start. There are a couple of chapter’s which bankruptcy can be filed under like chapter 7, 13, and 11. Chapter’s 7 and 13 are somewhat popular among filers, but chapter 11 is an option as well.
What, exactly, is a chapter 11 bankruptcy?
A chapter 11 bankruptcy is a type of bankruptcy in which the filer works out a reorganized payment plan to pay off their debts. Unlike a chapter 11 bankruptcy, the filer does not have to give up any of their assets.
It sounds like a chapter 13 bankruptcy, what’s the difference?
Both chapter’s 13 and 11 have payments plans that allow the filer to pay back their debts. However, one of the most important differences is the debt limit that is on a chapter 13 bankruptcy, a filer is only allowed so much secured and unsecured debt when filing for chapter 13 bankruptcy whereas in a chapter 11 bankruptcy there is no debt limit.
Who can file for chapter 11 bankruptcy?
Both individuals and business can file for bankruptcy. However, for an individual, chapter 7 or chapter 13 might be a better option unless their income is too high or their debt is too high, then chapter 11 would be the better option.
Is a chapter 11 bankruptcy expensive?
Generally speaking, chapter 11 bankruptcies are considered to be the most expensive. The filing fee alone is 3 times that of the filing fee for a chapter 7 bankruptcy. So, usually, yes, a chapter 11 bankruptcy can be on the expensive side.
How long does a chapter 11 repayment plan last?
Unlike chapter 13, there is no time limit on how long the repayment plan will list. The length of the repayment plan will be determined by the court and based on the case.
Is there also a discharge?
Yes, in a chapter 11 bankruptcy the filer will receive a discharge from the court. Usually, after a complete repayment plan has been approved and confirmed, remaining debts not included in the plan are discharged.
What are the advantages of a chapter 11 bankruptcy?
in a chapter 11, it is possible to remove 2nd mortgages, strip away debt that cannot be sustained, adjust interest rates on debt you choose to keep, and payoff other debt entirely. Also, you can even rewrite mortgage terms for periods that greatly exceed 5 years on investment properties so that you can pay back the debt over a longer period of time and potentially lower your monthly mortgage payments significantly.
What are the disadvantages of a chapter 11 bankruptcy?
You may have to start paying creditors back relatively quickly after you file your case. Usually, chapter 11 cases require that you produce a significant amount of financial data to the court each month. It is a big commitment; it requires steady and stable income. Also, they tend to be far more expensive than a Chapter 13 bankruptcy case
