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Don’t quality for Chapter 13?

For Individuals, a Chapter 11 bankruptcy can be used to achieve the same goals as a Chapter 13.  While a Chapter 13 is a more streamlined and cost-effective version of the Chapter 11, Bankruptcy rules limit those who can qualify for Chapter 13.  If you have more than the following debt limits, you must file Chapter 11 rather than Chapter 13:

  • Secured debts: $1,257,850
  • Unsecured debts: $419,275

Just like the Chapter 13, a Chapter 11 provides an interest-free repayment plan for those who have a stable, disposable income. This type of filing can assist you if you want to keep your assets and have the opportunity to pay off your debts over a period of time.  Although, the Chapter 11 requires more in legal fees, it is also more flexible.  You can restructure debts over longer periods of time (7-10+ years) making it more affordable than Chapter 13.  Sometimes, you can even completely renegotiate a rental property mortgage.

During the life of your Chapter 11 plan, you are under the protection of bankruptcy and the law forbids creditors from starting or continuing any collection efforts. You will generally pay back only a portion of your consolidated debts, interest-free, and the remaining dischargeable debts that are not paid back within a payment plan are discharged. Chapter 11 bankruptcies require you to have a regular income sufficient to pay your current expenses, and the Plan Payment is designed to pay back anything from 0% to 100% of your debts.

Benefits to filing Chapter 11 Bankruptcy:

  • Stop the foreclosure of your home. Chapter 11 allows you to keep your home while you catch up on the mortgage payments in which you are behind.
  • Remove a second mortgage from your home. If the value of your home is at or below the amount of your first mortgage, then you can strip the second mortgage off your property.
  • Avoid accumulating the monthly interest and penalties that credit card companies require you to pay.
  • “Cram down” your car loan, which reduces the principal balance of your loan to the current market value of the vehicle.
  • Repay your priority tax liability.
  • Stop the repossession of your vehicle.

Debts Not Eligible for Chapter 11 Discharge

Some debts are not eligible for discharge under a Chapter 11 filing.

These include, but are not limited to:

  • Debts paid outside the plan
  • Debts for alimony and child support obligations
  • Debts for death or personal injury caused by the debtor’s operation of a motor vehicle while intoxicated
  • Tax debts that have been assessed within the prior 3 years
  • Student loan debts
  • Debts for restitution, criminal fines, and fraud
  • Debts incurred while the plan was in effect
  • Debts owed to creditors not given notice of the Chapter 11 filing

Every situation is different, and our firm can analyze your unique circumstances to see if Chapter 11 is right for you. Relief starts now! Call us at (925) 278-6680 or (510) 978-4150.

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