Chapter 11 bankruptcies are noticeably distinct from other chapters. Not only does it allow debtors to maintain possession of most of their assets after filing, there are only certain parties that are allowed to apply. Below you’ll find a guide as to what Chapter 11 bankruptcies are, who apply, and the benefits can be found by filing.
Who Can Apply
To understand Chapter 11 bankruptcies better, we first have to look at who is able to apply. This chapter of bankruptcy is meant to be filed by small businesses, corporations, and partnerships.
There are individuals that are able to file under Chapter 11, but only if they have too much debt to file under Chapters 7 or 13. This debt limit generally hangs around $383,175 in unsecured debt and $1,149,525 of secured debts.
How it Works
- Filing and making a plan: Within 120 days of filing, debtors have the right to propose a plan in order to reorganize their business to prepare for the bankruptcy. A plan is then created by the debtor to detail the final structure with creditors given the ability to oppose it. Once the court has approved the plan, however, the details then become legally binding.
- Plan confirmation: This is the time where creditors have a chance to vote on the plan. If all parties are unable to agree on the reorganization, the case may be reverted to a straight bankruptcy, or other opportunities may be explored for creditors to get relief.
- Automic stay: As with all types of bankruptcy, automatic stay is put in place to ensure that creditors do not take any action to collect from the debtor during the bankruptcy process.
- Business as usual: Once the reorganization plan has been completed, the debtor is able to continue running their business.
Benefits To Chapter 11
Unlike other forms of bankruptcy, Chapter 11 does not require debtors to liquidate their assets and provides multiple opportunities to gain back financial independence. Here are a number of benefits that come with Chapter 11 bankruptcy:
- The ability to keep your business running and continue to make a profit while making payments.
- Automatic stay stops creditors in their tracks from taking any collection actions against you and gives you peace of mind.
- High-interest loans can be lowered.
- Making smaller payments and reorganizing your debts to gain financial freedom.
Contact Our New York Bankruptcy Team Today
We know how stressful finances can be in almost any scenario. Through a compassionate and personalized approach, we offer not only to help you through a bankruptcy filing, but to help you get back on your feet and stay there.
If you are considering filing for Chapter 11 bankruptcy but you don’t know where to start, don’t hesitate to contact us today through our website or give us a call at (917) 909-6166!