Do You Need To File Chapter 11 Bankruptcy?

30 Aug Do You Need To File Chapter 11 Bankruptcy?

People in financial distress often think that bankruptcy is something they need to consider. I often get calls from people asking specifically about Chapter 11 bankruptcy, wondering if they need to consider it. The answer to this question from most individuals is “No”. Most consumers don’t need to even think about 11, since Chapter 7 bankruptcy and Chapter 13 bankruptcy are usually better suited for them.

Chapter 11 is a complex and expensive legal bankruptcy proceeding where the debtor proposes and files a reorganization plan designed for corporations in financial trouble. It also applies to individuals who owe a lot of money. If someone owes over $336,900 in unsecured debt or more than $1,010,650 in secured debt, they don’t qualify for Chapter 13 reorganization and they must file 11. (These amounts are good from April 2007, and they will be adjusted over time.)

It is one of the several types of reorganization bankruptcy. It can be filed by corporations or individuals, proposing a repayment plan of debts.

Chapter 9 is a reorganization by municipalities and is very rare.

Chapter 12 is a reorganization for farmers that give them special protection.

But if you are an ordinary person with debts like a mortgage on a normal house, a car or two, medical bills, and credit cards or personal loans, then you probably don’t need to consider Chapter 11 bankruptcy, and you also don’t want to.

You probably need to look at Chapter 13, which is much easier type of bankruptcy and it also involves less legal work. Chapter 13 is a smaller and less complex version, much more affordable and also it normally gives faster relief. Consumers don’t usually have the need for the more complicated process, and Chapter 13 is able to shortcut a lot of the red tape involved while providing protection and debt relief.

Or you might be better in a Chapter 7 case, just discharging the debt and starting over. This is particularly true if you don’t have a lot of assets and no extra money to pay towards your debts.

Talk to an experienced attorney about your issues, but if you are are a regular person, it probably won’t be about Chapter 11.

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Concentrating in Consumer Bankruptcy Law since 1988; Wake Forest Law School JD 1987 Law Office of Susanne M. Robicsek since 1993, Law Clerk to Judge Rufus Reynolds, US Bankruptcy Judge for Middle District of NC; Burns Price & Arneke, PA, David Badger and Associates, PA.

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