The thought of filing for bankruptcy may carry a negative implication to many Americans, but the reality is that bankruptcy can offer a fresh financial start when a business or individual is faced with an extraordinary amount of debt they cannot repay. There are many different ways to file for bankruptcy, organized into chapters. Chapter 11 bankruptcy typically pertains to businesses, but individuals may also file under Chapter 11 status under certain circumstances.
If you are unsure whether bankruptcy is right for you, an Orange County Chapter 11 attorney is your best resource. At the Law Office of Christopher P. Walker, our team routinely assists Orange County, CA, clients with their bankruptcy filings. We understand how stressful it is to confront massive debt and feel as if you will never escape your creditors. Our team will work closely with you through every phase of your Chapter 11 proceedings and help you better understand your financial options throughout this process.
Technically you do not need to hire an attorney to assist you with a Chapter 11 filing. However, working with an Orange County Chapter 11 attorney will make the process much easier and more efficient. Your attorney will know how to complete the necessary paperwork and secure the documentation you will need to provide with your filing. Your bankruptcy case will also involve proceedings in bankruptcy court, and your Orange County Chapter 11 attorney can help you prepare for your initial hearing and any further proceedings that follow.
Chapter 11 bankruptcy can provide an individual or a business with financial breathing room to recover from debt. The Chapter 11 process is not necessarily a debt liquidation but rather a restructuring. Debtors filing for Chapter 11 bankruptcy have the option to liquidate certain assets to pay off their debt, but they may do so at their own discretion. They may propose liquidation terms as part of their repayment plan proposal. Approval for Chapter 11 bankruptcy in most cases allows the filing party to retain ownership over most of their property and assets by reorganizing their debts into a more manageable repayment plan.
The benefits of Chapter 11 bankruptcy include:
- Protection from collection efforts. Once you file for bankruptcy, there will be an automatic stay on your property and assets that will prevent your creditors from continuing further collection actions against you.
- The ability to continue your business operations. Struggling businesses can file for Chapter 11 and continue to serve their customers, providing them a better chance of escaping their debt and reorganizing their finances.
- Asset protection. Chapter 11 status will effectively immunize some assets and property from future collection as long as the filing party adheres to the terms of their repayment plan.
- Unsecured debt discharge. Like Chapter 7 and Chapter 13, Chapter 11 bankruptcy can offer the opportunity to discharge unsecured debts.
- Saving money. Chapter 11 bankruptcy is a restructuring of debts, which often means repaying creditors only fractions of what is owed.
- Refinancing options. If your bankruptcy filing pertains to mortgages on commercial or income properties, you may qualify for refinancing with more manageable payment terms.
To succeed with your Chapter 11 filing, you and your Orange County Chapter 11 attorney must complete and submit a petition for Chapter 11 status with the bankruptcy court and compile a financial disclosure package. This will contain all relevant financial information that your case entails, such as complete accountings of all your assets, properties, and debts. You must then provide a proposal for your repayment plan. As long as you can offer a reasonable repayment plan, your Chapter 11 bankruptcy filing is likely to succeed.
Once the court receives all necessary information from you, it will submit your proposed repayment plan to your creditors. This will lead to a confirmation hearing between you and your creditors’ representatives. As long as the plan is approved, the Chapter 11 filing will move forward, and the filing party will need to abide by the terms of their repayment plan.
Unlike other bankruptcy filing options, Chapter 11 does not require a filing party to meet any specific debt threshold to qualify for this type of bankruptcy. This is yet another reason Chapter 11 status can be beneficial for both businesses and individuals. They can qualify for Chapter 11 and continue their normal day-to-day activities while repaying their debt under more agreeable terms.
When a corporation, limited liability company, or any other party that is not an individual files a Chapter 11 case, the filing party receives a discharge when the bankruptcy court confirms its plan. Their court order will contain both the filing party’s plan and their Chapter 11 discharge. If an individual files for Chapter 11 bankruptcy, their discharge order is filed separately after completing their proposed repayment plan. Once a debt is discharged, the debtor is no longer liable for the debt.