The following article will cover:
- Potential alternatives to Chapter 11 bankruptcy for individuals facing financial distress.
- How the repayment plan works in a Chapter 11 bankruptcy for individuals and the factors that influence its term.
- The management and addressing of individual assets and debts during a Chapter 11 bankruptcy case, as well as the types of debts that are dischargeable and any exceptions or limitations.
What Are The Potential Alternatives For Chapter 11 Bankruptcy For Individuals Facing Financial Distress?
Individuals facing financial distress have several alternatives to Chapter 11 bankruptcy. They can consider Chapter 7, Chapter 13, or in some cases, Chapter 12 if they’re farmers or fishermen. In some states, there’s an option for an assignment for the benefit of creditors, which functions similarly to Chapter 7, albeit with fewer complications. However, creditors can dispute this and force an involuntary bankruptcy.
How Does The Repayment Plan In A Chapter 11 Bankruptcy For Individuals Work And What Factors Influence The Term Of The Plan?
In a Chapter 11 bankruptcy, the repayment plan is defined in the plan of reorganization, with the primary factor influencing its term being the debtor’s disposable income over the next five years.
What Happens To The Individual Assets And Debts During A Chapter 11 Bankruptcy Case, And How Are They Managed And Addressed?
During a Chapter 11 bankruptcy case, the debtor’s assets are governed by the terms of the reorganization plan. Typically, the plan provides for the return of all asset interest to the debtor. Upon filing for bankruptcy, these assets are placed in a bankruptcy estate and are usually returned to the debtor when the case concludes, unless they are abandoned or subject to an arrangement with a secured creditor.
What Types Of Debts Are Dischargeable In A Chapter 11 Bankruptcy For Individuals And Are There Any Exceptions Or Limitations?
Rather than listing all dischargeable debts, it’s easier to highlight non-dischargeable ones. These include debts based on fraud, breach of fiduciary duty, reprehensible conduct, child support, taxes (generally accrued three years prior to filing), injuries caused while under the influence, willful and malicious injuries, and certain obligations from divorce proceedings. Interestingly, debts resulting from a manslaughter conviction may be dischargeable, as it doesn’t necessarily involve intent.
Can Individuals Convert Their Chapter 11 Bankruptcy Case To Another Bankruptcy Chapter If Needed, And What Factors Might Influence That?
Yes, individuals can convert their Chapter 11 bankruptcy case to Chapter 7 or 13 at their discretion. The decision to convert is usually influenced by their ability to manage the demands of a Chapter 11 case, which can be resource-intensive. If during reorganization they realize that they’re unable to handle it, they might opt for liquidation under Chapter 7. In some cases, it makes more sense to convert to Chapter 7 to preserve assets and resources when it’s uncertain if certain claims can be discharged.
For more information on Alternatives For Chapter 11 Bankruptcy, a free initial consultation is your next best step. Get the information and legal answers you are seeking by calling (212) 739-7599 today.