Florida Chapter 11 Bankruptcy Attorney
Federal law outlines many different types of bankruptcies but of them all, Chapter 11 is one of the most complex to file. Chapter 11 bankruptcy is mostly used by businesses that want to make their debt more manageable, while remaining open and continuing to operate. Individuals with very high levels of debt can also file Chapter 11, but these cases are rare. Below, our Florida Chapter 11 bankruptcy attorney explains how this type differs from others and the benefits the process can provide.
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is also called a reorganization bankruptcy because it restructures a business’ or individual’s debt into a repayment plan. Many people think that because Chapter 13 does the same thing that Chapter 11 is very similar. It is not. Repayment plans in Chapter 13 only span three to five years. Due to the fact that Chapter 11 deals with much higher levels of debt, there are no time limits on the repayment plan.
While any business can struggle with debt, Chapter 11 is intended to keep companies running during the bankruptcy process. As such, the business must have sufficient revenue to stay open and pay the debt once the repayment plan has been confirmed, or approved, by the court. It is for this reason that small businesses often do not qualify for Chapter 11. In these instances, a business can still file bankruptcy but they will generally have to use Chapter 7. Businesses do not qualify for Chapter 13, which is also a reorganization bankruptcy.
Another difference between Chapter 11 bankruptcy and other types is that business owners are not the only ones who can file. Creditors can also come together and file Chapter 11, which is known as involuntarily filing.
Why File Chapter 11 Bankruptcy?
The fact that business owners can keep their company running through the process is the biggest benefit of Chapter 11 bankruptcy. By generating revenue through continued operations, it also makes it easier for business owners to make the payments according to the repayment plan.
As soon as the Chapter 11 petition is filed, the court will also issue an automatic stay. The automatic stay prohibits creditors from trying to collect on the debt or from taking legal action against the business owner or the business. The automatic stay remains effective during the entire bankruptcy process.
Creditors are also often willing to negotiate repayment amounts that are more affordable for the business during Chapter 11. They know that they will recover at least a portion of the debt and so, are often more willing to work with borrowers.
Call Our Chapter 11 Bankruptcy Attorney in Florida for a Free Consultation
At Ronald Cutler, our Florida Chapter 11 bankruptcy attorney has the necessary experience to help you through the complex process, negotiate with your creditors, and give you the best chance of a positive outcome. Call or text us now at 386-490-9949 or contact us online to schedule a free consultation and to learn more about how we can help.