If you’re considering bankruptcy, the first step you need to take is determining which form of bankruptcy fits your needs. There are several types, and each serves a unique function. What is chapter 11 bankruptcy and is it right for you? An experienced bankruptcy attorney can answer that question.
What Is Chapter 11 Bankruptcy?
Chapter 11 is most commonly known for reorganization. Reorganization is a plan for repayment on debts that are owed by an individual or business. It is a significant tool in helping failing businesses regain profitability. It can include serious actions such as laying off employees, hiring new management and shutting down branches or locations. Many businesses are still able to remain open and operational under Chapter 11. Once a reorganization plan is approved, a business or individual can delay paying off debts that are causing stress and challenges to their everyday lives. Reorganization is an attempt to avoid liquidation. However, if the plan fails or is rejected, liquidation may still occur.
Chapter 11 is known as the most challenging and expensive forms of bankruptcy which is why individuals tend to look into other forms first before settling on Chapter 11. Just because it is expensive and challenging, does not mean it is bad or cannot be incredibly helpful to debtors in the right circumstances.
A reorganization plan can be proposed by the debtor or by the creditors. It must serve the interests of the creditors to be approved. If a debtor decides to come up with a plan, working with a Chapter 11 bankruptcy attorney and a credit counselor can help ensure the plan serves both the individual and creditors. Credit counseling is actually required in order to file Chapter 11. A repayment plan created with a credit counselor has to be filed with a court for approval before an individual or business can move forward with the plan. There are typically 4-18 months to come up with a plan depending on the circumstances of the business or individual.
Who Can File Bankruptcy?
Chapter 11 is an option for almost anyone. While there are strict eligibility requirements, it isn’t limited to businesses (although they are most commonly the ones who file Chapter 11). Chapter 11 can be filed by individuals, large corporations, companies, and joint ventures ( among others). While individuals can file Chapter 11, it is typically favored by businesses due to its complicated nature.
What is chapter 11 bankruptcy and is it the right choice for your circumstances? If you still have questions and live in the Chicagoland area, contact our experienced Chapter 11 bankruptcy attorney, Mark Schottler. He can help you determine if this is the right form of bankruptcy for you, and can walk you through the steps for filing. Bankruptcy is an opportunity to get your life back on track and have a fresh start. While it can be a scary process, having an experienced attorney on your side can ease your nerves and help you make the right decision for your future. Set up a free 30-minute consultation here.