How to File For Chapter 11 Bankruptcy
Although all of us do not have to think about filing for bankruptcy protection from the law, it is still imperative for us as businessmen to know how to go about obtaining this kind of relief from the courts. Ignorance of the law is not an excuse, after all.
Here are some of the things that you should know about when filing for Chapter 11 Bankruptcy.
Chapter 11 Bankruptcy provides relief for debt-ridden individuals and companies so that they can have the breathing space they need to start taking care of these debts. In essence Chapter 11 allows for streamlining and managing debt payments so that the company or individual remains in operation while debts are being managed in a way to fit the paying capacity of the debtor.
Unlike Chapter 7, Chapter 11 in the United States allows for the continued operations of the debtor while the debts are being renegotiated with the creditors. However, just like Chapter 7, Chapter 11 is also extended to couples and individuals in addition to corporate entities.
In a sense, Chapter 7 provides for the liquidation of a company or the assets of an individual. What makes Chapter 11 a bit more popular among the corporate entities of the United States is that it allows merely for restructuring; although some assets may be ultimately lost, the business is not lost forever. There may be a change in ownership and ultimately the structure as some divisions of the company is sold to debtors or even third party entities, but the core business remains in operation. The only difference is that the actions or investment undertaken by the company are monitored by the
The Requirements For Filing For Chapter 11 Bankruptcy
In order to be eligible for Chapter 11 Bankruptcy Relief, the debtor should file these documents along with the petition for protection. These documents include:
- Statement of assets and liabilities
- Statement describing current income and expenses
- Proof of executory contracts and unexpired leases
- Financial affairs statement
Additional documents are also required for couples or individuals filing for Chapter 11, so that they will qualify. These individuals would be required to file a document showing that they have procured credit counseling. This document would show the debt management plan that repeated credit counseling has brought about. Just like a corporate entity, an individual filing for Chapter 11 bankruptcy relief is also required to submit information on his current income, as well as his assets and liabilities. He would be required to define his current expenses against his current income as well.
Where You Can File For Chapter 11 Bankruptcy
According to the Bankruptcy Code, anyone who is qualified to can file for Chapter 11 in the Bankruptcy Court in the jurisdiction where the individual or has business interests in. This means that, if you live in New York, but has a business in California, you have the option of filing for bankruptcy in New York or California.
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