Filing for bankruptcy can be unsettling and very confusing. How do you know if you’re eligible? And if you are, which kind of bankruptcy do you file for? What are the requirements? To help you through all of this, it’s typical to hire a bankruptcy attorney to advise you on proceedings and filings and help with court procedures.
There are three kinds of bankruptcy, Chapter 7, Chapter 13, and Chapter 11. While you’ve probably heard about Chapter 7 and Chapter 13, Chapter 11 is a lot less common, especially for individuals as opposed to companies.
Chapter 7 allows you to have all of you debt eliminated, but forces you to give up all of your property. Chapter 13 allows you to keep your property, but you must pay off all of your debts through a repayment plan. These are very simple, broad definitions of what these filings entail, because there are also eligibility requirements. For the purpose of this article, a quick interpretation in order to compare is all that is necessary.
What the main focus is, is Chapter 11 bankruptcy, as it is less well-known.
Chapter 11 allows to debtor to propose a plan after bankruptcy, including cutting down costs in order to keep collectors at arm’s length. Chapter 11 gives you the opportunity to reorganize your debt while keeping some of your assets. It is very similar to Chapter 7 and Chapter 13, as it is seemingly a combination of the two. The debtor has the ability to pick and choose which assets to release and which to keep, while organizing their debts in order to pay them back.
While Chapter 11 might be more appealing, it is a lot less common for individuals as it can be very costly and be very time consuming. Chapter 11 is more typical for large corporations who have significantly large amounts of debt, and allows them to reorganize.
As with other forms of bankruptcy, once the bankruptcy proceedings begin, all collectors must halt attempted collections, something known as an automatic stay. While the proceedings for bankruptcy are taking place, the consumer can go on with business as usual.
The reorganization plan is a huge part of Chapter 11 bankruptcy. The priority of payments is decided, and then debtors have to opportunity to negotiate to create payment plans or can even have some debts removed or partially removed.
There is a US bankruptcy court right in Milwaukee, so for more information you can visit them to pursue the proper paperwork and filings.