CHAPTER 11

Chapter 11 Bankruptcy

Usually, most persons (or in the case of a chapter 11, a corporation) with sufficient income, assets and debts (that cannot otherwise be adequately protected or forbidden from  a chapter 7 or a chapter 13 bankruptcy) may be able to file for Chapter 11 Bankruptcy Reorganization Protection.

 
In addition, most debtors who have fallen behind with their regular mortgage or rent payments or other secured payment obligations that they are unable to cure the arrears in a maximum of (5) five years can file for Chapter 11 Bankruptcy reorganization.
 
In a Chapter 11 Bankruptcy, you may be able continue the operation of the business, you can potentially avoid obligation under personal guarantees becoming due. You may be able to recover payments made to some creditors within 90 day prior to filing the case and you may be able to briefly stop making all payments of rents or to other vendors or creditors during the reorganization process and most legal actions can be stayed.
 
Generally, in most cases a bankruptcy reorganization plan will not need to be filed until after 90 to 180 days after filing of the initial Bankruptcy. This will allow a business/person with valuable time to asses and evaluate an ongoing financial crisis and to negotiate with creditors.
 
In a Chapter 11 Bankruptcy, a Debtor can possibly re-negotiate leases, loans, cash flow loans, merchant services loan, employment contracts with employee and vendors and state and federal agencies, resolve or address some potential litigations arising out many possible scenarios including breaches of obligations and defaults.
 
Debtors can also possible continue to operate their business, pay employee salaries and defer taxes and avoid payroll penalties.
 
In many cases, the court can also be asked to value the property and reduce the debt or payments to the fair market value of the asset on the date of filing. Although this benefit does not generally apply to a primary residence in a chapter 13 it can be applied to reduce the mortgage of a primary residence so long as the loan proceeds can be traced back to a business purpose. Otherwise a debtor can attempt to reduce or cram most other secured obligation and leases in Chapter 11 to their fair market value.
 
Unlike a Chapter 7 or Chapter 13 Bankruptcies, a Chapter 11 Bankruptcy can last as long as reasonably needed.
 
Like in a Chapter 13, a Chapter 11 Bankruptcy is a reorganization plan, where the debtor creates a bankruptcy plan that lasts for a desired period of time during which they can possibly continue to operate their business make regular monthly payments to their creditors, cure their arrears and pay down or discharge a portion of their total unsecured debt.
 
If the Debtor is a person, as with a Chapter 7 and 13 at the end of this payment period, the bankruptcy is completed and all remaining unsecured debts and other obligations may be forever discharged. However, most Chapter 11 debtors emerge from Bankruptcy after a brief period of time.
 
Generally, in Florida, a debtor may be able to protect 100% of equity in their primary residence in any bankruptcy chapter.
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