Chapter 11 Bankruptcy Basics, Part 1
By Brett Weiss, Maryland Bankruptcy Attorney on Sep 18, 2008 in Bankruptcy Practice and Procedure, Chapter 11 Bankruptcy
In recent years, more and more individuals and businesses are filing for relief under Chapter 11 of the Bankruptcy Code. This blog (and the ones that follow) will answer some basic questions and provide information about Chapter 11.
What is Chapter 11? Can’t get more basic than this! A Chapter 11 is simply a bankruptcy case filed under Chapter 11 of the Bankruptcy Code, just as Chapter 7 is filed under, well, Chapter 7, and Chapter 13 is filed under Chapter 13. Chapter 11 cases are typically called “reorganizations,” although some Chapter 11 cases can also involve the liquidation, or sale, of assets.
Who can file for Chapter 11? Both individuals and businesses (corporations, LLC’s, partnerships, etc.) can file for Chapter 11.
What’s the difference between Chapter 11 and Chapter 13? Businesses, other than sole proprietorships, can’t file for Chapter 13. There are also debt caps on individuals who file: you can’t have more than $1,010,650 in secured debt and $336,900 in unsecured debt to be eligible for Chapter 13. (Yes, these debt limits are far too low. No, Congress hasn’t considered changing them for a long, long time, other than to index them for inflation.)
There are many technical differences between Chapter 11 and Chapter 13—I’ve used a handout in some of the lectures I’ve given on individual Chapter 11 cases that runs to about a dozen single-spaced pages. Many of these differences matter only to your lawyer; others, such as requirements for monthly reports, separate bank accounts, and Disclosure Statements, will affect you directly.
More tomorrow…
Sorry, comments for this entry are closed at this time.