Chapter 11 Bankruptcy Information

One of the usual and common requests we receive in email feedback from our visitors is from consumers wanting to know the difference between Chapter 7, Chapter 13 and Chapter 11 bankruptcy. First and foremost please understand that we absolutely are NOT trying to advise you on which one is best for your situation. Only you and/or your attorney can decide that for your specific situation.

What we have done below is provide a basic explanation of chapter 11 bankruptcy law to provide our site visitors with general knowledge on the process. We have no way to know which of the bankruptcy types would be best for you, if any, or how it could affect your own personal assets and since we are not attorneys, we can not answer e-mails or questions regarding this matter.

A Chapter 11 is a bankruptcy type reserved for businesses. If you wish to claim personal bankruptcy, try visiting the Chapter 7 or 13 links listed above.

So what is chapter 11 bankruptcy? Basically, a ch 11 Bankruptcy is for businesses who have a viable service or product, that are in what is likely to be temporary financial trouble, who could again become profitable if paying their current debts and financial responsibilities were postponed for a certain period of time. Also referred to commonly as "reorganization". Most people have heard of mega airlines going into Chapter 11 Filings and yet, they still remain open - this is how.

Debtors are granted an automatic stay when filing chapter 11 bankruptcy. During this time, the debtor gets some space and creditors may not bug them for payments. The debtor also remains in control of the business during the Chapter 11 procedure.

Different from a Chapter 7 or 13, a Chapter 11 usually requires a creditor committee. This is usually made up of the seven debtors owed the most amount of money by the debtor.

The debtor must submit a chapter 11 plan of reorganization - in other words, explain how they plan to become profitable again and pay back all of their creditors. This plan must be approved by creditors.

There are two main "business designations" in Chapter 11. A "small business" is a business that has less than 2 million dollars in debt. Anything over 2 million puts you in the other category. Small businesses can often be put on a "fast track" and are treated a bit differently than an average Chapter 11 - the mega difference being that they don't necessarily need to have a creditors committee.

Chapter 11 bankruptcies are complicated and usually involve not only the business owner, but also affects employees and others. It is highly recommended that one not even consider a Chapter 11 without retaining the services of an attorney highly experienced with these types of bankruptcies.

Again, we must note that the above is for informational purposes only and is not intended to be used as legal advice for any person or business entity. Click here for more information on how you can file bankruptcy or if would like to purchase do it yourself bankruptcy form software.

Related Articles:

+   What businesses considering bankruptcy should know before filing
+   Important information about filing chapter seven personal bankruptcy
+   Potential alternatives to filing for personal or business bankruptcy
+   Tips for choosing a bankruptcy attorney before filing