The following are the main advantages to filing a Bankruptcy:
Under Chapter 11 Bankruptcy, a debtor continues his business operations while at the same time reorganizing its financial affairs. Any person or entity eligible to file a chapter 7 Bankruptcy would also be eligible to file a chapter 11. This includes individuals, partnerships or corporations. Unlike a Chapter 7 Bankruptcy, a railroad may also be a debtor in a Chapter 11. An individual may filed a Chapter 11 case, even when he or she is no engaged in business.
Under a Chapter 11 Bankruptcy a corporate (or individual) debtor can restructure its business operations, continue to operate a business and reorganize its financial affairs. The reorganizations process is achieved by filing a plan and disclosure statement and getting them confirmed through the Bankruptcy Court. The goal being to that the business would continue to operate, provide jobs, satisfy creditors and produce a return for the owners.
In a Chapter 11 , a Debtor may restricted its debts or the terms under which a Debtor in a Chapter 11 Bankruptcy will pay off its debts. This includes lien stripping in some cases. This is done primarily by motion and can reduce the amount of a secured creditor's lien to the value of available collateral securing the debt. In short, the debtor may force a secured creditor to release its lien by paying the secured creditor the current value of the collateral, rather than paying the full amount to the debtor owed the secured creditor. The balance would be treated as an unsecured claim.
A Chapter 11 Bankruptcy usually allows a debtor to continue business operations while attempting to reorganize the debtors debts at the same time. This makes headlines when an organizations such as Crystal Cathedral, United Airlines, Lehman Brothers or General Motors files for Chapter 11 protection. But it is just as applicable for a corner gas station, a pizza parlor, or any other business. If the Debtor is a legitimate and operating commercial enterprise of any type, it may benefit from a Chapter 11 filing.
For most individuals there are two different types of Bankruptcy filing -- A Chapter 7 liquidation and a Chapter 13 repayment plan. Both serve the same purpose of providing relief from your debts. But each has advantages and requirements that will determine which is the best filing for any individual debtor or whether the individual is even qualified to file that particular chapter.