A Morris County Bankruptcy Lawyer Explains a Lesser-Known Debt Solution
Bankruptcy offers individuals a valuable and efficient solution to ongoing financial troubles. The two most common forms of individual bankruptcy are Chapter 7 and Chapter 13 filings. However, when people hear the phrase “Chapter 11 bankruptcy,” they often immediately think companies going under reorganization.
While not as common for individual bankruptcies, Chapter 11 still offers the same protections and rights as other forms of bankruptcy for certain people. However, there are some key differences.
Why Would a Person File Chapter 11?
Both individuals and businesses can file for Chapter 11; however, individuals typically only file in cases where:
- They have more than $336,900 in unsecured debt, like credit cards and medical bills
- They have more than $1,010,650 in secured debt, like vehicles, homes, and valuable property
- They need to keep property or assets in order to run a business
Many small business owners choose Chapter 11 when they see the need to restructure both their personal and business financial obligations.
What Are the Benefits of Chapter 11 Bankruptcy for Individuals?
Like all forms of bankruptcy, a Chapter 11 filing immediately invokes the automatic stay, temporarily stopping collection calls, threatening letters and foreclosure proceedings.
People filing Chapter 11 also enjoy the benefits of certain bankruptcy exemptions. Property covered by the exemptions will vary depending on whether they use the federal or New Jersey guidelines; however, they can rest assured knowing that they will be able to keep what they need to survive during bankruptcy. Exceptions are available for a person’s house, vehicle, valuable property, books, clothes and tools that are essential to one’s livelihood or trade.
Chapter 11 cases are similar to Chapter 13 in that they restructure debts to be paid off through a payment plan over three to five years. However, under Chapter 13 rules, the payment plan can last a maximum of five years, which means that some people may have difficulty managing the payments. Conversely, Chapter 11 cases must take a minimum of five years, which could potentially offer lower payments over the course of the plan.
Your Morris County bankruptcy lawyer will know how to use the Chapter 11 rules to maximize the benefits you receive.
Legal Counsel is Essential for Chapter 11 Filings
No matter what form of bankruptcy you are filing, it is essential to have a qualified and experienced Morris County bankruptcy attorney on your side. Take the first step towards financial stability by contacting our office.