Can I File For Chapter 11 Bankruptcy To Avoid Foreclosure?

Struggling with debt and facing foreclosure can be extremely stressful, and you may be wondering about your options for avoiding foreclosure while also reorganizing your other debts. If you have conducted some preliminary research into the relationship between bankruptcy and foreclosure, you may know that a reorganization bankruptcy can allow you to stop the foreclosure proceedings from moving forward while also giving you a chance to catch up on mortgage payments you owe. You might also know that a Chapter 7 bankruptcy case — a liquidation bankruptcy — can initially stop a foreclosure, but it will not allow you to catch up on mortgage payments and to remain in your home. If you are not sure about forms of reorganization bankruptcy, you might have come across information about Chapter 11 bankruptcy and you might be wondering: Can I file for Chapter 11 bankruptcy to avoid foreclosure?

While Chapter 11 bankruptcy can allow a debtor to avoid foreclosure and to get caught up on their mortgage payments, it is not usually the best bankruptcy option for individual debtors. Usually, a debtor will file for Chapter 13 bankruptcy instead of Chapter 11 bankruptcy to stop foreclosure and to remain in their home. Our West Palm Beach bankruptcy lawyers can explain more fully.

Chapter 11 Bankruptcy Can Stop a Foreclosure, But Less Expensive Options May Be Available 

As a type of reorganization bankruptcy, you could file for Chapter 11 bankruptcy in order to stop a foreclosure and to catch up on your mortgage payments through the debt reorganization and repayment plan. However, as you may or may not know, Chapter 11 bankruptcy is quite expensive. This type of bankruptcy is costly in terms of up-front filing costs, and it can also be expensive throughout given the complexities of the Chapter 11 process. Chapter 11 bankruptcy is usually filed by businesses and by individuals who have too much debt to be eligible for Chapter 13 bankruptcy.

For most consumers, Chapter 13 bankruptcy will make much more sense if you want to prevent foreclosure and to keep your home.

Chapter 13 Bankruptcy Could Make More Sense for You 

Chapter 13 bankruptcy is also a type of reorganization bankruptcy, but it is designed specifically for individual debtors. It is a more streamlined type of bankruptcy for individuals than Chapter 11, and it costs significantly less money. The only reason that an individual consumer would usually file for Chapter 11 instead of Chapter 13 is because their debt limits are too high. Currently, Chapter 13 has a debt limit of $2,750,000 in combined secured and unsecured debt.

If you have less debt than $2,750,000 and you qualify for a reorganization bankruptcy, you should likely talk with a lawyer about filing for Chapter 13 bankruptcy to stop a foreclosure and to keep your home.

Contact a West Palm Beach Bankruptcy Lawyer 

If you have any questions about reorganization bankruptcy, or your eligibility for Chapter 11 or Chapter 13 bankruptcy to avoid foreclosure, you should seek advice from an experienced lawyer who can help you. Do not hesitate to get in touch with one of the experienced West Palm Beach bankruptcy attorneys at Kelley Kaplan & Eller today to learn more about your ability to stop a foreclosure on your home with bankruptcy and to catch up on mortgage payments.

Sources:

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics#:~:text=This%20chapter%20of%20the%20Bankruptcy,seek%20relief%20in%20chapter%2011

uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-13-bankruptcy-basics