Just as individuals suffering with overwhelming debt turn to bankruptcy for relief, businesses suffering from financial hardships can turn to bankruptcy for protection. Individuals generally file for Chapter 7 or Chapter 13 bankruptcy. Chapter 11 of the Bankruptcy Code is generally for the reorganization of a business's debts to allow it to continue to operate. In rare occasions, individuals with debts in excess of the Chapter 13 bankruptcy debt limitations may also file a Chapter 11 bankruptcy.
Reorganize while continuing to operate
A Chapter 11 bankruptcy allows a business to continue to operate while reorganizing its debts and financial affairs. Upon filing a petition in bankruptcy, the debtor automatically assumes an identity known as the "debtor-in-possession." The term refers to a debtor that keeps possession and control of its assets while undergoing a financial reorganization. The debtor-in-possession may also utilize a Chapter 11 bankruptcy for the purpose of liquidating its assets. Chapter 11 imposes certain requirements on the debtor-in-possession during the reorganization process; such as reporting monthly income and operating expenses to the bankruptcy court and establishing new bank accounts.
Stop collection activities and lawsuits
Immediately upon filing a Chapter 11 case, an injunction called the "automatic stay" stops all collection activities, lawsuits, judgment enforcement and repossession efforts.
Chapter 11 requires the filing of a plan of reorganization. The plan generally proposes a debt consolidation repayment plan. The plan must be approved by the bankruptcy court. After the plan is confirmed, the debtor-in-possession is required to make plan payments in accordance with the terms enumerated in the bankruptcy plan of reorganization. The confirmed plan creates new contractual rights, which replace or supersede pre-bankruptcy contracts. The creditors are bound to accept future payments per the plan.
Contact a Greensburg County Debt Relief Lawyer
At Stewart, McArdle, Sorice, Whalen, Farrell, Finoli & Cavanaugh, LLC, our bankruptcy attorneys have helped many businesses reorganize their debt through Chapter 11 bankruptcy. Contact us for a free consultation regarding your debt situation.
Call us at 724-610-9914 or toll free at 866-601-9627 to learn more about bankruptcy. Our bankruptcy attorneys and legal staff will do all the necessary paperwork and make sure you get the maximum relief allowed by federal law. All initial consultations are free.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.