While Chapter 11 bankruptcies are normally utilized by businesses, individuals can also pursue this option. Doing so takes a bit of work however, as Chapter 11 can be more complicated than Chapter 7 or 13, which most people go for when filing for bankruptcy. Debt.org explains what you need to know if you choose this debt relief option and how you can ensure the best possible results.
Much like Chapter 13, Chapter 11 bankruptcy reorganizes debt into a manageable payment plan, which entails making payments over a period of time. A person can opt to file or can be forced into filing for Chapter 13 when receiving petitions from three or more creditors. A repayment plan is then created, and creditors get to vote on whether it’s accepted. If not, you have the option of requesting a cramdown, which means creditors will be forced to accept it. You may also want to take the plan offered by creditors to protect your property.
Fees for Chapter 11 tend to be much higher. Additionally, this process takes a lot more time. However, Chapter 11 can be amenable to some people because it will save their assets from liquidation. There are income limits associated with Chapter 13, which means that not everyone will qualify. Conversely, if you file for chapter 7 you run the risk of losing property and other assets.
Because Chapter 11 can be complex, and there are usually a lot more assets involved, it’s best to have experienced legal help when filing. You may also be mandated to undergo credit counseling before filing, which provides information on proper financial management. Credit counseling is intended to prepare you for your post-bankruptcy future. If you're unsure whether Chapter 11 is right for you, contact legal counsel today.