A Maryland and Washington DC Bankruptcy Attorney Explains
Bankruptcy offers an invaluable solution to individuals and families struggling under the weight of overwhelming debt. Although most people find that they can end their financial troubles through a Chapter 7 or Chapter 13 filing, some debtors find that they could benefit from filing under the rules of Chapter 11.
Reasons for Filing Chapter 11
The law allows any individual to file for Chapter 11. While it is more common for an individual to file for Chapter 7 or Chapter 13, there are certain circumstances that necessitate filing under Chapter 11.
Since Chapter 11 filings are mainly used by businesses, the rules are structured to handle large amounts of income, assets and debts. An individual can file for Chapter 11 only if their debts meet or exceed:
- $336,900 in unsecured debt like credit cards, medical bills, vacation or home improvement loans and term deposits;
- $1,010,650 in secured debts like homes, motor vehicles, boats and property.
Chapter 11 cases are comparable to Chapter 13 cases in that they allow a person to reorganize their debts to get their financial lives back on track. Rather than risk losing valuable property in a Chapter 7 case, individuals using the Chapter 11 system have options for keeping their home, vehicle and other cherished belongings.
A key difference between Chapter 11 and other forms of bankruptcy is the length of the payment plan. Due to the large amount of assets and debts that are handled in a Chapter 11 filing, a person’s payment plan will typically last up to 60 months. Although the plan may run for a longer time than a typical Chapter 13 case, at the conclusion of the plan, the result is the same: a discharge of debts and a fresh financial start.
Chapter 11 cases carry certain rules that do not apply in other filings. These rules include:
- Insurance is required on any property that the debtor keeps, including their home and vehicle;
- Filing monthly reports showing all household income and expenses;
- Opening new bank accounts;
- Using checks that state “Chapter 11 Debtor in Possession” for the duration of their payment plan.
Contact Our Office to Take Action Today
Contact our office today to take the first steps towards starting life anew. Our Washington DC and Maryland bankruptcy attorney will work with you to find a solution to your financial troubles. You do not have to find a way out of debt by yourself. With qualified and experienced legal assistance, you can make the very best decisions for yourself.