While you may know that there are clear distinctions between Chapter 7 and Chapter 13 bankruptcies, you may be more unclear with Chapter 11. As most Connecticut residents know, Chapter 11 bankruptcy primarily benefits business owners and corporations, although a small number of individuals can also take advantage of this option. Before you commit to a plan, you should clearly understand how these bankruptcy types differ.
As our previous blog posts have explained, Chapter 13 bankruptcy allows people to restructure and repay their debts within a reasonable amount of time. If you are considering filing for personal bankruptcy, you may choose this option if you have a steady income and do not want to lose non-exempt assets, such as your home. On the other hand, FindLaw explains that Chapter 11 bankruptcy is usually for businesses, corporations and partnerships to reorganize how their company runs without facing asset liquidation.
Chapter 11 is also known as the reorganization chapter. Much like Chapter 13, you would present your plan to creditors. After they accept your plan and the bankruptcy court approves, Chapter 11 bankruptcy would allow you to restructure your business and become more financially productive. As you can see, this move may save your business and give it the chance to thrive in the future.
Since each bankruptcy type is different, and one option may be better for some and not for others, it is important to obtain experienced counsel to determine the best choice for you. Therefore, this information should not replace the advice of a lawyer.