Chapter 7 vs Chapter 11
Chapter 7 vs Chapter 11
Dealing with financial loss and debt can be terrifying, especially if you’re unsure which type of bankruptcy best fits your financial situation. Before deciding to file for bankruptcy, it is best to consider other debt alternatives available to you, as well as the different types of bankruptcy. Here, you will find out the differences between Chapter 7 vs Chapter 11.
If you’re an individual or a small business thinking about filing bankruptcy, our trusted Portland bankruptcy attorneys are here to help you understand the basics of bankruptcy. At Michael D. O’Brien & Associates PC, we have more than two decades of experience assisting Oregon families in getting a fresh start. Call our law firm today at 503-694-4445.
Chapter 7 Bankruptcy
While both Chapter 7 and Chapter 11 provide debt relief and payment to creditors, only Chapter 7 allows a business to close. This is possible by selling off the properties to pay back their lender.
Filers who don’t have enough income to enter a debt repayment plan qualifies for Chapter 7. Lenders receive payment only if the debtor or the person who owns the money has enough assets to sell. A Chapter 7 bankruptcy trustee is the one who is responsible for administering the sale and transfer of funds to the creditors.
Chapter 7 is one of the fastest types of bankruptcy chapters to finish. However, the length of your Chapter 7 bankruptcy depends on the property you own. For instance, if all your properties and assets are protected through bankruptcy exemptions, then your bankruptcy will be over in four months or less. This is because you have no property to sell or give to creditors, so that you will have a quick bankruptcy process.
On the other hand, some bankruptcy filers can only protect certain assets, while others aren’t even entitled to exemptions. This type of bankruptcy case stays open longer, usually for about 6 to 12 months, to give the bankruptcy trustee more time to liquidate and sell the properties.
If you want to know more about Chapter 7 bankruptcy process, call us at today 503-694-4445.
Debt Discharge Through Chapter 7 Bankruptcy
The most valuable part of filing Chapter 7 is that it discharges the qualifying debt of the filer. However, you should note that not all debts will be discharged. Upon filing the bankruptcy, you will receive the debt discharge within three or four months, even if the trustee is not yet finished selling the assets.
Who is Qualified for Chapter 7 Bankruptcy
Not everyone qualifies for a Chapter 7 bankruptcy. Individuals, sole proprietors, or business entities are evaluated differently depending on:
- Qualification requirements for Chapter 7 bankruptcy
- Property & assets that a bankruptcy trustee can sell
- Which debts can be discharged
- Personal assets for business debt payments
- The likelihood of facing creditor lawsuits
When it comes to filing bankruptcy, it is essential to have an experienced bankruptcy attorney by your side. Choosing between Chapter 7 vs Chapter 11 can be tough. However, if you want to keep all your future income and you don’t use it for debt payments, then Chapter 7 might be for you.
Our Portland Chapter 7 bankruptcy attorneys can help you avoid property loss, especially if you’re dealing with business bankruptcy. At Michael D. O’Brien & Associates PC, our experienced bankruptcy attorneys can answer your question about bankruptcy filing costs and procedures. Call us today at 503-694-4445 to schedule a consultation.
Chapter 11 Bankruptcy
Large businesses with debts that exceed Chapter 11, Subchapter V Small Business Filing must proceed with the traditional bankruptcy under Chapter 11. Due to the number of creditors and lenders involved the number of votes required before a plan gets approved, Chapter 11 can be expensive and cumbersome. In addition, it is also unavailable to some small businesses.
If your business still has a regular income stream to support a debt reorganization plan, then a Chapter 11 bankruptcy works for you. Additionally, your business may also take out a loan to support the restructuring of your business.
Chosing between Chapter 7 vs Chapter 11 can be a tough decision. To help you choose which type of bankruptcy best fits your situation, connect with our experienced bankruptcy attorneys in Portland, Oregon. Call us at 503-694-4445 to schedule a free consultation.
Some procedural requirements for a Chapter 11 bankruptcy include the approval of your creditors. The US trustee appoints a committee of creditors that consists of the seven largest unsecured creditors, who have the following responsibilities:
- Investigating the business operations of the debtor
- Overseeing the bankruptcy administration
- Participating in the debt reorganization planning process
- Negotiating the payment plan with other creditors
Unsecured creditors comprise the committee. This is because unsecured debts are not backed by collateral, and they carry the least amount of protection under a Chapter 11 bankruptcy. That is why they are more likely to be discharged.
In contrast, secured creditors gain protection from bankruptcy because they are entitled to get back the collateral if you fail to pay back your debts.
There are different types of bankruptcy chapters available for individuals and businesses owners. If you’re deciding between whether to file bankruptcy under Chapter 7 vs Chapter 11, our bankruptcy attorneys can help you decide. Or if you’re not sure whether bankruptcy is right for you, our bankruptcy attorneys can help you find the best bankruptcy alternative for you.
Call our Portland bankruptcy attorneys today at 503-694-4445 to get legal help finding debt relief in Oregon.
Chapter 11 Disclosure Statement
Under Chapter 11, you must disclose your background information completely. The reason for this is so your creditors can make informed decisions based on your financial situation and capacity. The disclosure statement indicates how you plan to repay each of your creditors along with information such as:
- The present state of the business
- The amount each creditor will receive
- Properties and assets
- Tax and liabilities
- Possible risks for creditors
- Possible litigation risks
Creditors use the overview of your disclosure statement to raise objections. Creditors are allowed to objections, therefore creating a maximum of two rounds of litigation.
Once the creditors approve the disclosure statement, the court sets a date for creditor voting and objections. Until then, you must wait before starting to solicit creditor votes.
Once your bankruptcy plan is approved, the debt discharge erases all debts named in the program. The discharge takes place upon the plan consensus from creditors and confirmation from the court.
Chapter 11: Subchapter V
In 2019, the U.S. Congress passed the Small Business Reorganization Act of 2019. The Subchapter V of Chapter 11 makes filing more accessible and more affordable both for individuals and business owners.
Chapter 11: Subchapter V resembles Chapter 13 more than Chapter 11. This is because it requires less creditor involvement in the bankruptcy process.
Income and Debt Qualifications
To qualify for bankruptcy under Chapter 11:Subchapter V, your business must be operational and have a stable income to support the debt reorganization plan. Your debt must not also exceed $2,725,625. However, this amount can still change. That is why it is important to seek the help of an experienced Chapter 11 bankruptcy attorney in Portland, Oregon, to keep you updated on any policy changes.
If you’re considering filing a Chapter 11 bankruptcy: Subchapter V, speak with a Portland Chapter 11 bankruptcy attorney right away. A competent attorney can help you evaluate your case and decide whether filing this bankruptcy is best for your financial situation.
Consult with Our Portland Bankruptcy Attorneys Today!
If you are dealing with crippling debt and you’re considering filing for bankruptcy, deciding whether to file for bankruptcy under Chapter 7 vs Chapter 11 can be a tough decision to make. It can affect how you deal with home foreclosure, wage garnishment, or car repossession.
Not all types of bankruptcy are the same. Before proceeding with bankruptcy, it is best to review your financial situation with an experienced Portland bankruptcy attorney. Our Portland bankruptcy attorneys are experienced in both Chapter 7 and Chapter 11 bankruptcy filings. Don’t hesitate to contact our legal team at Michael D. O’Brien & Associates PC today! We can help you assess your situation and give you a fresh start.
Call our bankruptcy law firm in Portland, Oregon, today to schedule a free consultation.