High Debt Individuals Turning to Chapter 11 Bankruptcy
When considering personal bankruptcy, most people consider Chapter 13 and, even more so, Chapter 7. But there is another popular chapter, too: Chapter 11.
Tampa, FL (Law Firm Newswire) October 27, 2010 – “Although originally intended for businesses, individuals can be required to file for this chapter if their debt exceeds the limits of Chapter 13 bankruptcy,” said Tampa bankruptcy lawyer, Reginald Osenton of Osenton Law Offices in Brandon, Florida.
Currently, the limits of Chapter 13 bankruptcy are $1,081,500 for secured debt and $360,525 for unsecured debt. The threshold changes every three years in proportion to the Consumer Price Index.
Chapter 11 bankruptcies can be more advantageous in some cases for individuals. Here are some examples of how:
-Chapter 11 has no debt limits, unlike Chapter 13. As more and more consumers have taken advantage of larger amounts of credit that are being extended, this is an important point.
-Chapter 11 gives the debtor more freedom because there usually is no trustee appointed. This also saves the cost of having to pay for a trustee. There is also more flexibility with proposing a repayment plan.
-Debtors have the ability to modify their secured debts. With Chapter 13 cases, you have to wait a certain length of time before the loan of an item can be reduced to the current value of the product. But with Chapter 11, there is no time limit. So that motorcycle you bought 14 months ago that is worth less than its current loan? It can be reduced to the bike’s present worth.
Chapter 11 bankruptcy is also used by businesses. When a company is going out of business, Florida law provides a process for liquidation. But in the case of businesses that want to continue operating, Chapter 11 can help.
“Chapter 11 helps a business restructure its secured debts so they sometimes are extended and lowered. Also, there are no debts that are considered dischargeable,” Osenton said.
If you are a business or individual considering filing for Chapter 11, or another form of bankruptcy, it is important to speak with an experienced attorney who can answer your questions.
Osenton Law Office, PA
500 Lithia Pinecrest Road
Brandon, Florida 33511
Call: (813) 654-5777
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