Finding yourself in a situation that might force you into bankruptcy is a trying and difficult time. The process is complex, you have creditors clamoring for money, dunning phone calls, and it’s probable you’ll be served papers and required to go to court. This is something you absolutely, positively cannot handle by yourself. You need the skill and counseling of a crack bankruptcy attorney who can guide you through procedure, so that you’ll be able to retain as many of your assets as possible. And one of the first things you’ll want to discuss is which road to bankruptcy should you take.
Once you’ve made the personal to enter bankruptcy, the next question is should you opt for Chapter 7, or Chapter 11? In a Chapter 7 bankruptcy, your personal assets may be sold in order to pay your creditors. To qualify for Chapter 7, your monthly income should be less than the median income in your state for a household of your size. However, if your income exceeds the established limits, you may still qualify as long as you pass the “means test,” which determines whether you make enough money to make payments to your creditors. When this happens, the bankruptcy petition may be dismissed or converted to Chapter 11, which will require a repayment plan.
With a Chapter 11 repayment plan, your remaining debt will be discharged upon the satisfactory completion of the plan, however, debt relief is far more difficult to obtain with a Chapter 11 plan, and can be a lot more expensive. Chapter 11 is designed for business entities, and not individuals, as is the case with Chapter 7. If you’re an individual seeking bankruptcy relieve, Chapter 7 is your best option. If you’re a business, Chapter 7 may still be your best option, especially if your business is small. Large corporations may find Chapter 11 suits them best. However, in any case, you’ll need an attorney who specializes in bankruptcy procedures to guide you through the process.
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