Chapter 11 Bankruptcy for Churches
By Kurt O'Keefe, Attorney at Law on Jan 12, 2009 in General Bankruptcy Information
Chapter 11 bankruptcy (link to information on website of Detroit Michigan bankruptcy attorney Kurt OKeefe) is not just for individuals and for profit corporations.
As with Chapter 7 and Chapter 13 bankrupty cases, filing Chapter 11 stops foreclosure, garnishment (explained by southern Oregon bankruptcy attorney Karen Oakes) and any other collection activity by creditors.
Some churches are being hit with foreclosures after borrowing to expand or buy land or buildings, then not having the income to make the payments. Hmmm, something about this sounds familiar.
As with Chapter 13 payment plan bankruptcies, most Chapter 11 bankruptcies do not succeed. That is, all the payments called for in the Chapter 11 plan are not made, and the case is converted to Chapter 7 or dismissed.
The church in the Wall Street Journal article linked to above temporarily stopped the foreclosure sale, but was unable to get new financing or sell the building, so the foreclosure took place after all.
Chapter 11 works well when the business or individual has had a loss of income, but is now profitable again, and just cannot handle the debt service left from the money losing days.
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