Whether a business or individual files under this section of the bankruptcy code, it allows debtors great flexibility in how they pay off their debts. It may be possible to reduce the amount of a secured debt, lower the interest rate on that debt or make changes to the payment schedule. Unlike other forms of bankruptcy, the person or company that filed for protection pay creditors directly according to the reorganization terms parties agreed upon and which the court determines passes many tests.
While Chapter 11 bankruptcy was originally intended for businesses, the Supreme Court has ruled that individuals may be eligible to use it as well. In many cases, individuals who have filed for Chapter 11 have done so after shutting down their small businesses which incurred very substantial secured and unsecured debt. This form of bankruptcy allows individuals to maintain their homes and other assets while reorganizing their financial affairs.
In some cases, those who file may be able to retain their businesses once their case is settled. Individuals who file for Chapter 11 bankruptcy may also do so when they have more than $383,175 in unsecured debt and $1,149,525 in secured debt, which would make them ineligible for Chapter 13 bankruptcy.
If you need help with business debt or don't think that you qualify for Chapter 7 or 13 bankruptcy, call The Law Office of Richard T. Baum today. During your free consultation, he can review your financial situation to determine if Chapter 11 bankruptcy is right for you.