Getting Through Your Divorce and on With Your Life

Getting Through Your Divorce and on With Your Life

Which Is Better: Chapter 11 Or Chapter 13 Bankruptcy

Celina Henry

If you're struggling and want to retain your property and reorganize your debt, you'll have to choose between Chapter 11 and Chapter 13 bankruptcy. To determine the best option between the two, consult a bankruptcy attorney. Here are some differences between the two bankruptcy arrangements to help you determine which one will work best for your situation.

What Is Chapter 11 Bankruptcy?

Chapter 11 bankruptcy gives you time to reorganize your finances, which include keeping assets and reducing payments. Both individuals and businesses qualify for this arrangement. After filing for Chapter 11 bankruptcy, an automatic stay provision will put a creditor's collection efforts on hold.

With Chapter 11 bankruptcy for individuals, you should create a reorganization plan detailing how you intend to repay your debt. After your plan is approved by your creditors and upheld by the court, a trustee will be appointed to oversee the payments.

For businesses, your debt will be discharged after the court acknowledges your plan. The debts will be discharged after you make all payments under the reorganization plan for an individual filing. However, some debts cannot be discharged. These include some tax and child support obligations.

What Is Chapter 13 Bankruptcy?

A chapter 13 bankruptcy allows you to retain your property. However, your disposable income will be used to pay off creditors within a period of three to five years. Your dischargeable debts will be erased after you complete the repayment plan.

Chapter 13 bankruptcy is reserved for sole proprietors and individuals. Limited liability companies and corporations don't qualify because they're separate legal entities. After filing, an automatic stay is enforced to prevent any collection efforts by your creditors. The court will appoint a trustee to keep an eye on your payments.

Comparing the Pros and Cons of Chapter 11 and 13

Chapter 11 cases are expensive, which is the biggest downside for small entrepreneurs. This is why many people prefer Chapter 13. However, on the upside, the plan creates new terms between you and your creditors. This can be a good thing for a small business owner who needs more time to clear equipment loans and real property mortgages. Also, under Chapter 11, you don't have to relinquish your disposable income to a trustee.

The biggest disadvantage with Chapter 13 is that a sole proprietor has to file as an individual. Therefore, it doesn't apply to businesses. The debt limitations under this plan are also lower than those in Chapter 11. A trustee is also appointed to oversee the payments. On the bright side, filing Chapter 13 is cheaper than Chapter 11. Also, the approval process is faster. You can also discharge more debt types.

For more help, contact a local bankruptcy lawyer.


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Getting Through Your Divorce and on With Your Life

Going through a divorce? I know how you might feel – alone, stressed out, and probably even a little sad due to the loss of the life you have always known. Whether you have children or not, you might even feel a little guilty about the break down of your relationship. But I'm here to tell you that a divorce is not the end of the world. In fact, once you get used to the idea and start to move on with your life, you may find just as much, if not more, happiness than you ever had while you were married! Getting through the proceedings of your divorce in a dignified manner is the first step, and hopefully this website will give you the insight, support, and motivation you need to get through the process as painlessly as possible.