Chapter 11 Bankruptcy is a option for those who debts exceed the limit of Chapter 13 Bankruptcy, which is $360, 475 or $1, 081, 400 on unsecured debt and secured debt respectively. The common notion is that Chapter 11 Bankruptcy is only available for companies; but it is not the whole truth. In fact, Chapter 11 Bankruptcy is available for individuals or companies that meet the debt limit requirement.
The petitioner, which is the debtor at this case, becomes the debtor-possession upon the filing of the Chapter 11 Bankruptcy. In this case, the debtor-possession can file lawsuits, stop garnishments, obtain loan contracts and reject or accept contracts. However, these rights are subject to the approval of the court. The bankruptcy trustee can restrict the debtor in administering these rights to protect interest of creditors.
So how can you file Chapter 11 Bankruptcy?
- Get a bankruptcy lawyer. Getting a lawyer when you are planning to declare bankruptcy is very important. Whatever amount of resources you read or opinion from other people you get, the word of the bankruptcy attorney is still the best advice to have. Consider other bankruptcy types you can explore and look for the best approach to the problem. A lawyer knows the ins and outs of bankruptcy laws, especially for those who specialize on the field, and the lawyer can provide succinct and reliable information for your decision-making.
- Comply with the requirements of the court. The court allows companies and individuals to file Chapter 11 Bankruptcy once in six months. If you are planning to file the bankruptcy petition, consider the repayment schedule you can follow. In the same manner, it is a great idea to make most of the bankruptcy petition by appearing on trial hearings. If you failed to comply with the requirements of the court, you can only re-file the petition after 180 days you filed the previous one.
- Prepare the papers. There are several papers and documents you need to prepare for the Chapter 11 bankruptcy. Financial statements of the company or the individual must include the schedule of assets and liabilities, statement of income and expenses, and the statement on cashflow of the company. Even if the petitioner is a company, the credit counseling is still an important part of the process.
- Meet up with creditors. After the court receives the petition, you need to prepare for the meeting with creditors. Creditors may ask details of properties, assets and resources of the company, especially if these said assets are detailed on the loan or debt contract. It is the discretion of the creditors to accept a bankruptcy and repayment plan or not.
- Give up interest. When you filed for the bankruptcy, you are also declaring total surrender of the business to the hands of creditor. Although, you can still maintain rights of the company, for the sake of proper decorum, it is advised to allow the bankruptcy trustee to work on the survival of the company.
