10 Feb Chapter 11 is for People Too
People are eligible to file chapter 11. Chapter 11 is not just for Donald Trump. It may be for you. Why?
- If you make more than half the people in the US, you are presumed to be abusing the system if you file a chapter 7. Maybe you can get a pass if your debt is primarily business debt.
- But in chapter 7, you could lose all your non-exempt property. You may have some property which you want or need to keep. So you would ordinarily consider chapter 13.
- But in chapter 13, there are limits on debt. Now, if you have something more than $330,000 in unsecured debt or something more than $1 million in secured debt, you can’t file a chapter 13 case.
In these cases, chapter 11 is a very reasonable option.
Some good things about chapter 11 for people.
- You get to keep your stuff
- You can continue in business as a sole proprietor or a small business corporation or LLC
- You don’t have a trustee looking over your shoulder
- You can stop lawsuits and garnishments, even in very large cases
Some not so good things:
- Chapter 11 costs more
- You have to file monthly reports with the United States Trustee
- Everything you do is under supervision and scrutiny for five years.
- Filing fees and attorneys fees are much higher than for a chapter 13 case
- You have to pay your disposable income to creditors for five years
- You need to file a plan and disclosure statement with the court and get it approved by creditors
Chapter 11 is not for everyone. But these days, we are seeing many clients who were doing very well just a few months ago and who are now hitting the rocks. For these clients, chapter 11 often turns out to be a good answer and the only viable answer.
Lakelaw helps people in Illinois and Wisconsin reorganize under chapter 11.
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