Chapter 11 Bankruptcy Basics, Part 1

18 Sep Chapter 11 Bankruptcy Basics, Part 1

bankruptcy filing do overIn 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? It is a common misperception that only businesses can file for Chapter 11.Both individuals and businesses (corporations, LLCs, 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 for Chapter 13: you can’t have more than $1,081,400 in secured debt and $360,475 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…

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Brett Weiss, a senior partner at The Weiss Law Group, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11, and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his colleague, Daniel Press, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the previous Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute and the Bankruptcy Bar Association of Maryland. He has received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, the United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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