why is my lawyer telliing me to do chapter 11 and not 7

What is the difference between Chapter 7 and Chapter 11?

Jan 12, 2019 · The difference between Chapter 7 vs. Chapter 11 for a business is that Chapter 11 allows a business to continue operating. The Chapter 11 is a reorganization bankruptcy for the business. Each class of creditors can be provided for in the bankruptcy plan proposed by the Chapter 11 debtor in possession, often in the form of monthly payments distributed based on …

How does a Chapter 11 case start?

A Chapter 11 case begins with the filing of a petition in bankruptcy court. Generally, Chapter 11 cases are voluntary and it is the debtor who takes the initiative and seeks bankruptcy relief. Occasionally, however, creditors will band together to file an involuntary bankruptcy petition against a defaulting debtor.

Can I file Chapter 11 bankruptcy?

Dec 20, 2017 · Bankruptcy is generally a last resort, for businesses and individuals alike. Chapter 7 will, in effect, put a business out of business, while Chapter 11 may make lenders wary of dealing with the...

What is the difference between Chapter 13 and Chapter 11 bankruptcy?

Apr 08, 2011 · you fail to cooperate with the bankruptcy trustee (chapter 7 or chapter 13 trustee), you fail to timely make your chapter 13 plan payments, you are attempting to file a chapter 7 and you fail the “means test”, you’re in a chapter 11 bankruptcy and fail to …

Is it better to file a Chapter 7 or 11?

The main difference when it comes to Chapter 7 vs. Chapter 11 bankruptcy is that Chapter 7 is a liquidation plan. That means there's no repayment plan associated with a Chapter 7 bankruptcy. When you file Chapter 7, you typically agree to liquidate your assets to pay off as much of your debt as you can.Jun 2, 2021

What is the main difference between chapters 7 and 11?

The main difference between Chapter 7 and Chapter 11 bankruptcy is that under a Chapter 7 bankruptcy filing, the debtor's assets are sold off to pay the lenders (creditors) whereas in Chapter 11, the debtor negotiates with creditors to alter the terms of the loan without having to liquidate (sell off) assets.

Can a Chapter 11 be converted to a Chapter 7?

A party in interest may file a motion to dismiss or convert a chapter 11 case to a chapter 7 case "for cause." Generally, if cause is established after notice and hearing, the court must convert or dismiss the case (whichever is in the best interests of creditors and the estate) unless it specifically finds that the ...Oct 17, 2021

What is the difference between filing Chapter 7 11 or 13?

Chapter 7 and Chapter 13 are very different types of bankruptcy. The critical difference is that Chapter 7 revolves around the liquidation of assets to repay debts. In contrast, Chapter 13 is a debt restructuring option that can make it easier to manage your outstanding debts.Jul 21, 2021

Is it better to file a Chapter 11 or 13?

Chapter 11 bankruptcy works well for businesses and individuals whose debt exceeds the Chapter 13 bankruptcy limits. In most cases, Chapter 13 is the better choice for qualifying individuals and sole proprietors. A business cannot file for Chapter 13 bankruptcy.

Does Chapter 11 wipe out debt?

Chapter 11 and Chapter 13 bankruptcies allow for the discharging of debts but have different costs, eligibility, and time to completion. Chapter 11 can be done by almost any individual or business, with no specific debt-level limits and no required income.

What happens when a Chapter 11 is dismissed?

In any case where a bankruptcy petition is dismissed, the individual loses the protection of the automatic stay. This means his or her creditors can resume their collection attempts until he or she gains bankruptcy protection again by successfully filing a case.Aug 10, 2021

What is Chapter 11 dismissal?

Dismissal of a Bankruptcy Case – Dismissal ordinarily means that the court stopped all proceedings in the main bankruptcy case AND in all adversary proceedings, and a discharge order was not entered. Dismissal can occur because a debtor requested the dismissal and qualifies for voluntary dismissal.

Who gets paid first in Chapter 11?

Secured creditorsSecured creditors, like banks, typically get paid first in a Chapter 11 bankruptcy, followed by unsecured creditors, like bondholders and suppliers of goods and services. Stockholders are typically last in line to get paid. Not all creditors get repaid in full under a Chapter 11 bankruptcy.Jul 9, 2016

How long does a Chapter 11 stay on your credit report?

10 YearsHow Long Does Bankruptcy Stay On Your Credit Report?Bankruptcy ChapterBankruptcy Record Removed After*Chapter 710 YearsChapter 1110 YearsChapter 127 YearsChapter 13 (Discharged)7 Years1 more row•Sep 14, 2016

How A Chapter 11 Case Begins and Who Can Be A Chapter 11 Debtor

A Chapter 11 case begins with the filing of a petition in bankruptcy court. Generally, Chapter 11 cases are voluntary. In a voluntary Chapter 11 ca...

What Happens Before A Chapter 11 Plan Is Proposed

There is no absolute limit on the duration of a Chapter 11 case. Some Chapter 11 cases wrap up within a few months. Usually, however, it takes at s...

Chapter 11 Reorganization Plans

Ordinarily, the debtor has the exclusive right for four months after it files Chapter 11 to propose a reorganization plan. Upon a showing of good c...

Does Chapter 11 Really Work?

Reports and studies indicate that about 10 to 15% of Chapter 11 cases result in successful reorganizations. Most cases are dismissed (often by agre...

Why is Chapter 11 so expensive?

(By contrast, Chapter 11, Subchapter V filers are rarely granted extensions). Once the exclusivity period expires, the creditors' committee or other parties can propose alternate reorganization plans.

What does a bankruptcy trustee do?

Filer Retains Control of the Business. Unlike other bankruptcy chapters, a bankruptcy trustee isn't put in charge of the business and other bankruptcy property. The filer continues to run the everyday functions of the business as a "debtor in possession" during the Chapter 11 bankruptcy.

How long can a debtor extend the reorganization period?

Ordinarily, the debtor has the exclusive right to propose a reorganization plan for the first four months; however, the court can extend the debtor's "exclusivity period" for to up 18 months after the petition date. This provision is one of the reasons why Chapter 11 is so costly. (By contrast, Chapter 11, Subchapter V filers are rarely granted extensions).

Who represents businesses in Chapter 11?

Counsel must represent all businesses that file for Chapter 11. A bankruptcy attorney will be in the best position to explain your options and the specific procedures you can expect in your case.

Can a sole proprietor file for bankruptcy?

But Chapter 7 can make sense in some cases. For instance, sole proprietors with service-only businesses often do well filing for Chapter 7 bankruptcy because they can discharge personal and business debt without jeopardizing the service-focused business. Explore the differences between Chapter 7 and 11 bankruptcy.

What is liquidating plan?

In some cases, "liquidating plans" shutdown the debtor's operations and provide for the orderly sale of its remaining property (although a debtor can accomplish this in a Chapter 7 business bankruptcy .)

What is Chapter 11 bankruptcy?

A Chapter 11 case begins with the filing of a petition in bankruptcy court. Generally, Chapter 11 cases are voluntary and it is the debtor who takes the initiative and seeks bankruptcy relief. Occasionally, however, creditors will band together to file an involuntary bankruptcy petition against a defaulting debtor.

How to file for bankruptcy chapter 7?

Your Guide To Chapter 7 Bankruptcy 1 Known as “liquidation” bankruptcy 2 Assets are sold off by a trustee to pay debts 3 When all assets are sold, the remaining debt generally is forgiven 4 Used by both businesses and individuals

What are the two types of bankruptcy?

Companies that find themselves in a dire financial situation where bankruptcy is their best—or only—option have two basic choices: Chapter 7 bankruptcy or Chapter 11 bankruptcy. Both are also available to individuals. Here is how these two types of bankruptcy work and how they differ.

How long does a Chapter 7 bankruptcy stay on your credit report?

A Chapter 7 bankruptcy will remain on an individual’s credit report for 10 years , a Chapter 13 for seven. 4.

Can a corporation file for bankruptcy?

To qualify for Chapter 7 bankruptcy, the debtor can be a corporation, a small business, or an individual. Individuals are also eligible for another form of bankruptcy, Chapter 13, in which the debtor agrees to repay at least a portion of their debts over a three- to five-year period under court supervision. 1:45.

What happens in Chapter 7 bankruptcy?

In a Chapter 7 bankruptcy, the assets of a business are liquidated to pay its creditors, with secured debts taking precedence over unsecured debts. In a Chapter 11 bankruptcy, the company continues to operate and restructures under the supervision of a court-appointed trustee, with the goal of emerging from bankruptcy as a viable business.

Does Chapter 11 require a trustee?

Like Chapter 7, Chapter 11 requires the appointment of a trustee. However, rather than selling off all assets to pay back creditors, the trustee supervises the assets of the debtor and allows business to continue. It’s important to note that debt is not absolved in Chapter 11.

What is Chapter 11 used for?

Unlike Chapter 7, Chapter 11 gives a company the opportunity to reorganize its debt and try to reemerge as a healthy business.

What happens if you are dismissed from bankruptcy?

When you are dismissed from a bankruptcy, your status reverts right back to where it was at the time that you filed the bankruptcy. If your home was in foreclosure at the time that you filed the bankruptcy, the mortgage company has the right to start procedures right back up again. (And in most cases, they do.)

Can a Chapter 7 bankruptcy be dismissed?

It’s a very rare situation that a Chapter 7 bankruptcy will get dismissed. On the other hand, in a Chapter 13 bankruptcy case, getting dismissed (or “kicked out”) from bankruptcy, unfortunately, occurs more often than many people would think.

Can you refile a Chapter 13 bankruptcy?

If you were in a Chapter 13 bankruptcy, there are some limitations as to how many times you can refile a Chapter 13. The bottom line in it all is to make sure that you take the steps necessary to comply ...

What does it mean when you file bankruptcy?

This means that any pending foreclosure, repossession, lawsuit, or debt collection attempts cease immediately.

How to file for bankruptcy?

First, you can expect your attorney to tell you whether filing for bankruptcy would be in your best interest. If it is, you should also learn: 1 whether Chapter 7, Chapter 13, or another type will help you achieve your financial goals 2 what you can expect during the bankruptcy process, and 3 whether your case involves any particular difficulties or risks.

What to expect during bankruptcy?

Most importantly, if you have any questions, you can expect your attorney to respond to your calls or emails promptly.

Is bankruptcy easy to handle?

Expect Competence From Your Bankruptcy Lawyer. Not all bankruptcy cases are complicated, but they aren't all easy, either. Either way, your bankruptcy lawyer should have the skill level necessary to handle your case. In general, the difficulty of your bankruptcy will depend on: the involvement of bankruptcy litigation.

What is the mandatory hearing for bankruptcy?

After filing for bankruptcy, all debtors must attend a mandatory hearing called the 341 meeting of creditors. But, depending on your case, you (or your attorney) might need to go to additional hearings. Some common types of hearings you can expect your attorney to represent you at: Chapter 13 confirmation hearings.

What is a retainer agreement?

In general, your retainer agreement (the contract you and your attorney sign) will outline the services your bankruptcy attorney will provide . Your attorney's job is also to provide you with competent advice throughout the bankruptcy process.

Can an attorney text you?

Attorneys have the option, but are not required, to send text messages to you. You will receive up to 2 messages per week from Martindale-Nolo. Frequency from attorney may vary. Message and data rates may apply. Your number will be held in accordance with our Privacy Policy.

What do bankruptcy attorneys do?

Almost all bankruptcy attorneys have specialized software that prepares and files your required bankruptcy paperwork with the court. You'll provide your attorney with all of your financial information, such as income, expense, asset, and debt information.

What happens if you fail the means test?

The consequence of failing the means test is that you must file Chapter 13 for bankruptcy relief. Chapter 13 may or may not be a good fit for you. But we all like to have choices. Just be scrupulous that you tell the truth on the loan application. Don’t sign it without reading it carefully.

When was the $200/month clunker adder disallowed?

The $200/month clunker adder the the operation deduction was disallowed by the 9th Circuit BAP in April 2014. The three judge panel held that bankruptcy law does not incorporate all of the provisions of the IRS Manual, just because it uses some part of the IRS standards.

How long does it take for a bankruptcy to be discharged?

In Chapter 7 bankruptcy, you normally receive a discharge a few months after filing your case.

Do not sell personal information?

Do Not Sell My Personal Information. Most debtors file for bankruptcy relief to discharge (wipe out) their debts. But your bankruptcy doesn't end when you receive your discharge. Your case is not officially over until the court closes it by entering a final decree or order.

Can you file for bankruptcy if you received a discharge?

Just because you received a discharge doesn't mean that you have no more responsibilities in your bankruptcy. If you have a complex bankruptcy with ongoing lawsuits or appeals, your case might remain open for a long time after the court grants your discharge.

Can creditors reopen bankruptcy?

Even after your case is closed, the trustee, your creditors, or you can request that the court reopen your case. If the trustee or your creditors discover that you provided false information on your bankruptcy papers or didn't disclose all of your property , they can ask the court to reopen your case in order to administer those assets ...

Can you reopen a bankruptcy case?

In some cases, you may also want to reopen your bankruptcy. For example, if you accidentally forgot to list a debt or if a creditor is violating your discharge, you might ask the court to reopen your case to address these issues.

What to do if you aren't sure about something?

If you aren't sure about something, contact your attorney for guidance. There are also some things you should avoid doing. If you find you've already done some of the things to avoid, let your attorney know right away. If you try to undo your actions, you could actually make the situation worse.

Can I open a new bank account if I owe money?

Your attorney may also ask for copies of bills and collection letters, as well. DO consider opening a new bank account, especially if you do your banking somewhere that you owe money. The bank may close your account when you file bankruptcy, so it's a good idea to already have a new bank account set up when you file.

Can I withdraw money from my retirement account?

DO NOT withdraw funds from your retirement accounts to repay debts without discussing this with your attorney. This is almost always a bad idea. DO NOT transfer any assets (real estate, car, money, or anything of value) to family or friends, without first contacting your attorney.

Can I use my credit card before filing bankruptcy?

Speak with your attorney prior to doing this. DO NOT use your credit cards or acquire new debt. Unplanned medical debt may be an exception, as you may not have a choice about incurring the debt. But if you use credit shortly before filing bankruptcy, you may end up having to repay some or all of that debt.