Vero Beach Chapter 11 Bankruptcy Attorney
Of all the different types of bankruptcy a person could file in Vero Beach, Chapter 11 is the most complex. Although Chapter 11 is typically used by businesses who need a corporate restructuring of their debts, this type of bankruptcy is sometimes suitable for individuals, as well. Below, our Vero Beach Chapter 11 bankruptcy attorney explains more about Chapter 11, so you can determine if it is right for you.
How is Chapter 11 Bankruptcy Different from Other Types?
The most common types of bankruptcies people think of are Chapter 7 and Chapter 13. During a Chapter 7, borrowers must pass a means test in order to be eligible. Those who qualify can have most or all of their debt discharged but some of the debtor’s property is at risk of being sold to distribute the proceeds among the creditors.
During a Chapter 13 bankruptcy, the borrower’s debt is not discharged but rather, it is restructured into a payment plan. Chapter 13 payment plans typically extend between three and five years, but the borrower is not at risk of losing any property. Chapter 13 does have limits on the amount of debt it can handle.
Chapter 11 is vastly different from Chapter 7. Chapter 11 does not require a means test because like Chapter 13, this type of bankruptcy restructures the debt into a payment plan. Unlike in a Chapter 13, there are no time constraints on a payment plan in a Chapter 11 and much larger amounts of debt can be handled. Also unlike both other types of bankruptcies, creditors can also force a business owner to involuntarily file for bankruptcy, or the business owner can file Chapter 11 on their own.
Advantages of Filing Chapter 11
The biggest benefit for businesses filing Chapter 11 is that the owner can continue to operate the business. This allows debtors to continue to generate revenue, which is helpful when complying with the repayment plan.
Once the bankruptcy petition is filed, the court will also issue an automatic stay. The automatic stay is a court order and prohibits debt collectors and creditors from contacting the borrower to try and collect on the debt. While the automatic stay is in effect during the duration of the bankruptcy case, debtors and creditors also cannot take legal action against a borrower, such as filing a lawsuit against them.
The other advantage to filing Chapter 11 is that creditors are often more receptive to these repayment plans and are less likely to challenge certain elements of the case. Creditors know that they will recover most or all of the debt owed to them and so, are more likely to agree to the terms.
Call Our Chapter 11 Bankruptcy Attorney in Vero Beach Before You File
Chapter 11 is a great option for many businesses and individuals. The process is complex though, and can be expensive. Before you file, call our Vero Beach Chapter 11 bankruptcy attorney at Kelly, Fulton, Kaplan & Eller to get the sound legal advice you need and to ensure no mistakes are made that could unnecessarily delay your case. Call us now at 561-264-6850 or contact us online to schedule a free consultation and to learn more.