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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17252
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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when is chapter 11 bankruptcy the best option?

This answer was rated:

when is chapter 11 bankruptcy the best option?

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on

WALLSTREETESQ :

A chapter 11 is typically for corporations or businesses, that are in debt and want to continue running, the chapter 11 is a reorganization of debts, and the chapter 11 would reduce debts and reorganize debts of the business so the debtor would be able to continue to operate.

Customer:

can you file for a personal chapter 11 as well?


 

WALLSTREETESQ :

A personal chapter 11 is allowed but rare, an individual can file a chapter 13 or chapter 7 bankruptcy which would be better, the only time an individual would want to choose a chapter 11 is if their debt limit is too high for a chapter 13, and they have significant monthly income.

Customer:

what happens to the debts, do all lawsuits stop as with chapter 7 and 13? Do you pay the debts off over time like chapter 13, or are they discharged as with chapter 7?

WALLSTREETESQ :

lawsuits do stop as their is an automatic stay, what happens is the creditors have to agree to a reorganization plan to pay them, it is complicated, however you would be able to discharge a significant amount of debt through a chapter 11 as well.

WALLSTREETESQ :

In bankruptcy, a creditor’s lien can be reduced to the fair market value of the property securing it. So, if you owe $100,000 on a rental property that is worth only $50,000, your balance will be reduced to $50,000.

WALLSTREETESQ :

If a you want to keep your primary residence in bankruptcy and are behind on your mortgage payments, you cannot file a Chapter 7 to prevent the loss of your home. Chapter 13 is the typical solution; however, one of the limitations of Chapter 13 is that all your mortgage arrears must be paid within a 5 year period in equal monthly payments. If your haven’t made a mortgage payment in over a year, it can be very difficult to maintain your regular monthly payment in addition to an amount each month that will pay off your arrears in five years. With a Chapter 11 bankruptcy, you are not bound by this 5 year limit and can stretch out the cure period for a significantly longer time period.

WALLSTREETESQ :

Chapter 11 can give an individual the time needed to properly reorganize their affairs for liabilities considered nondischargeable under the bankruptcy code. Nondischargeable means the debt will not be wiped out in bankruptcy. Among the debts that will survive bankruptcy are payroll taxes. Payroll taxes are serious business, and if your business fails to pay these taxes, you can be held personally liable. Fortunately, filing Chapter 11 will stop any penalties and fees from accruing on these unpaid taxes, and your attorney can work with the IRS to structure a repayment plan or settlement offer that you can afford.

Customer:

is there a look back period, as in chapter 7 bankruptcy? 90 days and 12 months for insiders?

WALLSTREETESQ :

Lookback" period for preferential transfers under section 547 of the Bankruptcy Code is 90 days with respect to non-insiders, and 1 year with respect to insiders.

Customer:

so it is the same for all bankruptcies?

WALLSTREETESQ :

yes

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