Like most people, when you think of bankruptcy, you think of debt-ridden individuals struggling to get by. But that’s not always the case. There are some ways in which Chapter 11 bankruptcy can help an individual reorganize and become stronger financially. So, if you are considering filing for bankruptcy in Plano, Texas – Dallas/Fort Worth, read on to learn more about what to expect.
What is Chapter 11 bankruptcy?
Chapter 11 bankruptcy is a type of bankruptcy in which a business can avoid foreclosure on their home, destruction of their assets, and other financial calamities. It is also known as “reorganization bankruptcy.” When it is used by an individual for personal debt, it is because liabilities exceed Chapter 13 limits.
What are Chapter 13 limits?
According to 11 U.S.C. § 109(e), “Any individual, even if self-employed or operating an unincorporated business, is eligible for Chapter 13 relief as long as the individual’s combined total secured and unsecured debts are less than $2,750,000 as of the date of filing for bankruptcy relief.” If your personal debt exceeds $2.75M, then a Chapter 11 may be the next course of action.
A Chapter 11 bankruptcy filing begins with an individual or business petitioning the court for protection from creditors. The goal is to develop a plan that allows the debtor to repay all its creditors while still having enough money left over to continue operating.
What are the Chapter 11 bankruptcy benefits?
Bankruptcy allows you to reorganize your debt and pay off your creditors in a more manageable way.
- it is possible it will save you money in the long term
- reduce the stress of being financially strapped
- bankruptcy protects your assets from being seized by creditors
In most cases, you will be able to keep your home and all your possessions so long as you meet all the eligibility requirements of Chapter 11 bankruptcy.
Finally, filing for bankruptcy will help improve your credit rating. Improved credit will take time to happen, but your score will slowly rise as time passes.
What are the downsides of Chapter 11 bankruptcy?
Chapter 11 bankruptcy is often seen as a panacea for personal and financial problems. But there are some significant downsides to filing for this type of bankruptcy.
The biggest downside is that getting back on your feet can be difficult once you emerge from bankruptcy. The bills you didn’t have the money to pay while you were in debt may now become due, and you may need more resources to pay them. You may also have difficulty securing new credit since many lenders will view a bankruptcy record as negative.
There are options
If you are struggling with financial difficulties, bankruptcy may be an option. A Chapter 11 bankruptcy can help eliminate all or part of your debt and improve your finances.