The state of today’s economy presents the need for many individuals to consider and begin bankruptcy proceedings. High rate mortgages, credit card bills, and staggering unemployment numbers have made this the only option for many. However, many just don’t know where to start or what to expect. Here is what to expect when filing chapter 11 bankruptcy.
Chapter 11 bankruptcies, more often used by businesses, can also be used by individuals. Chapter 11 bankruptcy is often referred to as “reorganizational bankruptcy.” It is referred to as such because Chapter 11 allows an individual or company time to reorganize their finances.
To begin Chapter 11 proceedings, the involved party (Or parties) may not have previously filed for any chapter of bankruptcy for 180 days prior. Involved parties may also be excluded from filing due to failure to appear for hearings, or for defaulting on a previously set repayment schedule.
When filing Chapter 11 bankruptcy, it is imperative to have collected all financial documentation. This includes assets, liabilities, expenditures, and income statements. In addition to these documents, one must also provide proof of credit counseling to be filed alongside the other financial documentation. This must be obtained within 15 days of filing Chapter 11 bankruptcy.
The next step is to present all of your financial information to your creditors. You have the right to file a payment plan within the first 120 days of your having filed Chapter 11 bankruptcy. After this period of time your creditors have the ability to set forth their repayment ideas. Creditors have the right to accept or deny any repayment plan set before the court.
When filing Chapter 11 bankruptcy involving back taxes and penalties, you must also meet with the IRS. This typically occurs after you have met with the rest of your creditors.
Chapter 11 bankruptcy is an extensive legal proceeding. Some cases of Chapter 11 can take years to be completed within the court system. You must be prepared to have all of your financial information reviewed and scrutinized by any party to which you are in debt.
When filing Chapter 11 bankruptcy, you must also plan to repay these debts although any that occur after you have filed are not held against you. Chapter 11 should not be considered an “out”. It should only be filed when your growing debt is far more than what you are capable of paying off yourself. Now you know what to expect when filing Chapter 11 bankruptcy. Research the other chapters to find out which is the best option for your situation prior to filing any chapter of bankruptcy.
