What is Chapter 11 Bankruptcy and how does it compare to other forms of bankruptcy? To begin, Chapter 11 tends to be targeted to larger businesses, but individuals may also use this reorganization plan. Under Chapter 11, businesses and individuals may restructure their debt without liquidating their assets. So who typically uses Chapter 11?

• Small businesses
• Individuals
• Partnerships
• Corporations
• Other business entities

This plan allows these parties to reorganize operations and continue running through the whole bankruptcy process. Individuals with high levels of debt may use this process, but it can be very complex and costly. Most individuals seeking bankruptcy without liquidation prefer to file under Chapter 13.

What is Chapter 11 for Individuals?

• Chapter 11 is often the only option available to an individual debtor with income greater than that allowed by Chapter 7, and has secured debt greater than that allowed by Chapter 13.
• For example, an individual may own a large section of real estate property, but does not have sufficient liquidity to pay debts as they occur.
• Chapter 11 benefits individuals by allowing them to keep assets beyond the exemptions available under Chapter 7 and Chapter 13.
• Chapter 11 cases for individuals are infrequent, so if you are an individual considering filing Chapter 11 the guidance of a bankruptcy attorney could be very beneficial.

To initiate a Chapter 11 Bankruptcy case, a voluntary petition is filed with the bankruptcy court. Once the initial filings have commenced, all assets, liabilities, and a statement of financial affairs also must be filed.

Automatic Stay: Once the Chapter 11 process has begun, creditors must cease all actions to collect money owed to them from you or your business immediately. This allows an individual or business to begin negotiations with creditors, granting you some time to work through financial difficulties.

Chapter 11 also grants the exclusive right to file a plan of reorganization for a period of 120 days and to solicit a plan of reorganization for a 180 day period.

To better understand what Chapter 11 bankruptcy is, knowing the basics of other common types of bankruptcy is also useful:

Chapter 7 Bankruptcy: Probably the most common form of bankruptcy used by individuals, although businesses also may file under Chapter 7.  

• A court-appointed trustee assesses and gathers the individual’s assets.
• The assets are sold by the trustee for cash which pays off creditors.
• Some assets may be exempt, and these will not be liquidated.
• Chapter 7 filing cannot be repeated for six years.

Chapter 12 Bankruptcy: This voluntary bankruptcy is tailored specifically for farmers and fishermen who have a steady income.

• The debtor establishes a plan to pay off all or part of their debts over a certain period of time.
• Chapter 12 is a much less daunting and expensive procedure than Chapter 11.

Chapter 13 Bankruptcy: Works for individual debtors with a steady income and small businesses.

• During “individual reorganization,” debts are paid over a 3 to 5 year period and the debtor may keep their property.
• Chapter 13 stops foreclosures and repossessions.
• Once a plan is confirmed, creditors will be required to accept payments according to the terms of the plan or not get paid at all.

Hopefully this overview has been useful for those wondering, ‘What is Chapter 11 Bankruptcy?’.

Even though bankruptcy is federal law, and most states have similar procedures on handling bankruptcy, bankruptcy filing law in Illinois differs from laws in other states.That is why it is a good idea to always consult with an Illinois bankruptcy attorney.

The lawyers at Chang & Carlin, LLP are sensitive to the difficult time you may be facing and are here to help you through this tough financial and personal time in your life. If you are considering filing bankruptcy, let us help you determine what your options are and create a road map to help you get out of debt.

DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.

When an individual or business is about to go into bankruptcy or foreclosure they often spend their final months trying everything in their power to avoid those things. A homeowner will try desperately to stop foreclosure or sell the home before it is taken. A business owner may also try to sell a business in hopes of garnering a profit that can be used to pay of creditors.

According to an article in Yahoo! Auto Swedish car manufacturer Saab tried one last thing to save the business from bankruptcy. They worked out a deal with Chinese automaker Zhejiang Lotus Youngman. For a moment is seemed as if Saab would survive however GM blocked the agreement for security reasons. Saab is currently being manufactured with a GM engine because GM was the owner until 2010 when it was purchased by Dutch entrepreneur Victor Muller. GM also does a lot of business selling cars in Asia so having that information in the hands of a car manufacturer there was risky for their business.

GM narrowly escaped bankruptcy itself in 2009 and cannot afford any further set backs.

Probably a wise decision for GM has resulted in bankruptcy and liquidation for quirky car brand Saab.

Chicago bankruptcy lawyers will tell you that Saab probably did everything they could to avoid bankruptcy. Working deals at the last minute means they were trying to avoid bankruptcy just as any individual would.

If you are feeling the threat of bankruptcy hanging over your head talk to Chicago bankruptcy lawyers today and find out what steps you can take to secure your financial future. A bankruptcy filing attorney in Illinois is likely to offer a free legal consultation. This is an opportunity to get your questions answered before you commit to working with them. If you are struggling financially take advantage of the free advice and find out if there is a reasonable solution for your financial problems.

DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.