Filing For Bankruptcy Chapter 11 - The Terms and Conditions
A good number of people fail to draw the line between Chapter 11 and Chapter 13. Well, both are a tad similar. When filing bankruptcy Chapter 11, the debtor is not subjected to limits on the money owed. Initially, Chapter 11 was structured for big corporations, but it serves small business ventures just as well.
In many cases, you will find that Chapter 11 bankruptcy is referred to as the “rehabilitation bankruptcy”. Filing for bankruptcy under Chapter 11 is more involved than its counterparts because it helps the debtor to re-strategies and streamline debt in a bid to sustain their business venture. This means that the firm will communicate with its creditors to adjust the loan terms. These terms include the dollar value payments as well as the interest rates charged on the overdue payments.
The court will appoint a trustee who, rather than merchandising all the assets to reimburse the creditors, their duty will be to oversee the distribution of the monies that the debtors remit to them according to the court approved plan for the repayment and then the creditors will be paid off. Note that Chapter 11 does not absolve the incurred debt as restructuring only streamlines the terms and conditions affecting the debt and the firm should be in a position to repay back with the help of future earnings.
If a venture manages to handle Chapter 11, it will continue operating smoothly with its freshly structured debt plan. Failure to this, a debtor can always opt for Chapter 7 bankruptcy. However, under chapter 7, the business would have its assets sold off to pay the creditors, very well marking the end of the business.
Sometimes, you may not know whether you are eligible for chapter 11 bankruptcy. However, our attorneys will advise you appropriately. Any business wishing to seek Chapter 11 must observe a few eligibility rules in order to qualify for protection.
Here are some of the rules:
- The debtor should file a comprehensive schedule detailing the assets and liabilities, current expenses, a list of financial affairs, current income as well as a schedule detailing all the contracts and leases.
- In the event that the debtor fails to show up in court, fails to comply with the orders of the court or had previously filed for bankruptcy within the 180 preceding days, this debtor will not be allowed to file for bankruptcy.
- A debtor who wishes to file for Chapter 11 must first seek legal counsel from a reputable agency within the 180 preceding days
- The debtor can be a corporation, business entity, individual or a partnership
Debtors who file for Chapter 11 will get an automatic stay. This means that all the creditors should put all their collection activities on hold until further notice. In some instances, creditors will convince the court as well as the dedicated trustees that they wish to convert Chapter 11 to a Chapter 7 in which case full business liquidation would automatically occur. This would end the business unlike chapter 11, which would give the business an opportunity to continue running while at the same time repaying the creditors. It is similar to chapter 13 bankruptcy for individuals.
Filing Chapter 11 bankruptcy starts with getting a good lawyer, who can give you the full value for your money because this affair will cost some time. In addition, more paperwork is involved and you need a firm in Utah that specializes in bankruptcy cases. Such cases as these ones need a specialist and that is why we will give you a bankruptcy attorney fully dedicated to your case.
My name is Craig R. Chlarson. Whether you are seeking to eliminate your debt, typically through a chapter 7 filing, or whether you are seeking to reorganize your debt, typically through a chapter 13 filing, or even if you have basic bankruptcy questions, call me today. I can help you.
To schedule an appointment, call (435) 901-3449
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