What is an Individual Chapter 11 Bankruptcy and Why would I need one?
Chapter 11 bankruptcy is an option available to individuals, even though it is most commonly used by businesses. While most people file a Chapter 7 or Chapter 13 bankruptcy, Chapter 11 favorable to those whose income exceeds the amount allowed by Chapter 7 or who have too much debt to file under Chapter 13. Chapter 11 is most similar to Chapter 13 because it involves a reorganization of debt.
In Chapter 11, the debtor becomes known as a debtor and a debtor-in-possession. The debtor-in-possession has the same rights and responsibilities as a bankruptcy trustee, (except receiving compensation) though most rights must be exercised with court approval. Should the court decide either on its own or by the suggestion of a creditor that a debtor-in-possession is unable to adequately perform his responsibilities, it may appoint a bankruptcy trustee.
The process of Chapter 11 bankruptcy is fairly simple. The debtor drafts a disclosure statement describing how he will reorganize his debts and gets the court to approve it. Then, the plan must be confirmed by each impaired class of creditors (creditors who will receive less than what they are owed). Once the creditors agree to the plan and it is confirmed, a third-party agent typically executes the plan by providing how payments will be made or how an individual most operate for the duration of the plan. Finally, the bankruptcy will be discharged according to the confirmed reorganization plan, which is usually upon substantial completion of payments to creditors.
If you think you may not qualify to file Chapter 7 or Chapter 13 bankruptcy and want to learn more about Chapter 11, call Dailey Law Offices today to set up a free consultation with one of our experienced bankruptcy attorneys.