Author Archives: Canterbury Law Group

The kind of bankruptcy previously filed determines the amount of time between each case of bankruptcy. The date commences when the prior case is filed with the courts. The date of discharge does not come into play. Read on to learn more.

Chapter 7 Bankruptcy: 8 Years

This is the longest length of time legally required. Chapter 7 offers the fastest debt relief methods and does not require a plan of repayment before being discharged.

Chapter 13 Bankruptcy: 4 Years

While it is permissible to file Chapter 13 shortly following a Chapter 7 discharge, the person filing will not be allowed to obtain a Chapter 13 discharge in the second situation. However they can file Chapter 13 so tax debts as well as other outstanding debts may be paid off.

Chapter 7 Bankruptcy: 6 Years

This can be waived when one hundred percent of your creditors have been paid back and the original case was completed in good faith. As a Chapter 13 repayment plan can take up to five years to complete, you can file Chapter 7 within about twelve months following a Chapter 13 discharge.

Chapter 13 Bankruptcy: 2 Years

When you have previously filed Chapter 13 and obtained a discharge, there is at least a two year gap before you may file again. However the minimum repayment plan length is three years. Although it is possible to receive a discharge sooner if there are hardships that have not been forecast.

Continued Chapter 13 filings are sometimes utilized to manage tax debts or student loan payments as those debts are unable to be discharged.

Can A Bankruptcy Attorney Help Me File Bankruptcy Sooner?

Although they cannot help you skirt the time limits they may assist in helping you file a different kind of bankruptcy should you meet the criteria. For example, if you filed Chapter 7 and were unable to obtain a discharge. They can also assist in obtaining an order from the court making sure your automatic stay will not expire prior to the discharge being entered.

Source: https://upsolve.org/learn/how-often-can-you-file-bankruptcy

Chapter 11 bankruptcy is open to anyone and Chapter 13 bankruptcy is only for the individual. Read on to learn more!

In this article we look at some of the differences between Chapter 11 and Chapter 13 bankruptcy. In general terms both forms of bankruptcy allow the payment terms to be modified on debts that are secured, allow time for assets to be sold and allow for the elimination of obligations beyond the plan of the term.

Chapter 11 Bankruptcy

Almost anyone can file for Chapter 11 bankruptcy. There is no debt limit or income requirements. It is complex and usually the most costly so is often used by businesses. It allows business to remain open and operational as financial obligations are put into an organized plan that may include restructuring of the company and plans to reduce outgoings and expenses.

Chapter 13 Bankruptcy

This can only be filed on an individual basis who have a stable income. There are also debt limitations and these frequently change. Until April 2022, the limits are $419,275 in unsecured debt and $1,257,850 in secured debt. One big difference between Chapter 12 and Chapter 7 is Chapter 7 allows the elimination of the entire debt but some states do have limits. A repayment plan must be submitted explaining how the debts will be paid within three to five years. Usually, the filer may maintain some assets and payment is made via a trustee to creditors. Usually the terms have to be more favorable than they would be under other bankruptcy proceedings. 

COVID-19 Changes

The Coronavirus Aid, Relief, and Economic Security (CARES) Act signed in late March of this year raised the Chapter 11 Subchapter 5 debt limit to $7,500,000, excluding federal emergency relief payments due to COVID-19 from “current monthly income” in Chapter 7 and Chapter 13 and “disposable income” in Chapter 13, and allowing Chapter 13 repayment plans to be extended to seven years but is only applicable to bankruptcies filed after March 27, 2020.

Source: https://www.investopedia.com/ask/answers/061815/what-are-differences-between-chapter-11-and-chapter-13-bankruptcy.asp

Bankruptcy can take varying amounts of time to complete but most Chapter 11 bankruptcy plans are complete within six months to two years. read on to learn more.

The fee for filing Chapter 11 bankruptcy is $1,717 but you can reckon on spending in excess of $10,000 on legal fees. Business owners who file for Chapter 11 bankruptcy will discover it is not a simple process.

Chapter 11 Versus Chapter 13

Both plans allow for business reorganization but with a Chapter 11 bankruptcy, a trustee does not always have to be appointed. If they are the review the plan or reorganization and make recommendations to the court, They also undertake the responsibility of collecting payment as well as the distribution of payments. To qualify for Chapter 13 your bills cannot be in excess of $1,184,200 in secured debt, and $394,725 in unsecured debt.

Businesses who are struggling need more time to get back on their feet. Chapter 11 bankruptcy can assist in this. it all starts with a the filing of a detailed petition. Chapter 7 progresses quickly, since creditors do not get to vote on the plan of reorganization. But Chapter 11 requires many court hearings and that is why it can take in excess of a year.

Source: https://www.debt.org/bankruptcy/chapter-11/

Chapter 11 bankruptcy commences with a petition filed to the court and with the assignation of a case number. The automatic stay then begins and a meeting is scheduled with all the creditors. Depending on the circumstances of the person filing for bankruptcy, a reorganization or liquidation are the primary options available. Read on to learn more.

Reorganization

Chapter 11 bankruptcy allows a filer to perform a reorganization of their financial affairs. The bankruptcy plan explains how debts will be met in the future and offers the filer the opportunity to renegotiate and restructure the manner of how they will pay back their creditors.

U.S. Bankruptcy Code rules state creditors are divided into certain classes:

• Creditors whose debts are secured by a property liens
• Unsecured priority claims are given priority for their unsecured debts to obtain money from the plan of repayment
• Unsecured claims that are non-priority are only met when the above classes have been satisfied

Sometimes, those who fall into the last category will assemble a creditors’ committee to try and obtain payment. Security holders with equity also have a claim on the company and may be paid at any time (or not paid at all.) Creditors may also object to the class they have been assigned by the filer. Only the filer can file a plan of reorganization in the first 120 days once the case has been filed with the U.S. Bankruptcy Court. In the case the filer is a small business they are allowed 180 days. After that, a creditor may file a plan for reorganization if the debtor is yet to have filed a plan or has filed a plan that does not meet the acceptance of its creditors.

The plan of reorganization must include a statement of written disclosure that gives information regarding the business affairs of the filer so creditors can make educated decisions regarding the reorganization plan. In the case of a small business the court may decide the plan includes all the relevant information saying the statement of disclosure will not be required.

Proof of claims will be filed by creditors. These claims will contain the money they are owed and it maintains their rights but they still have to provide proof to the courts explaining the validity of their claim. Those with valid claims vote on whether they will accept the plan of reorganization. Court approval and the vote of the creditors are mandatory. The approval of the court requires at least one of the classes of impaired claims will vote in favor of the bankruptcy reorganization plan. Bankruptcy Code rules say a total class of claims accept a plan if at least two-thirds of the creditors of the total amount of the claims and more than fifty percent of the number of claims allowed in the class.

Confirmation

A confirmation hearing will convene so the court can make a determination to approve the plan. The court will ensure the plan is in line with bankruptcy laws and requirements. Once it is confirmed, the Chapter 11 bankruptcy case may be closed until the plan is completed, allowing the filer to save money on fees and prevents the need to file reports on a monthly basis.

In most Chapter 11 cases, a bankruptcy trustee us not appointed. The filer acts in a manner a trustee would in a Chapter 7 or Chapter 13 proceeding. Control is maintained by the filer over their business and finances. They are also responsible for the examination and objection claims from creditors as well as filing tax returns, accounting and meeting the additional duties and requirements of reporting. The administrative side of the Chapter 11 bankruptcy filing is managed by the U.S. Trustee and ensures the debtor does that is required. That said, a Bankruptcy trustee may be appointed when the debtor does not want to act as the debtor in possession. The court may also appoint a trustee to manage the operations if the court has good reason or suspects incompetence or fraud.

Liquidation

This is an option in a Chapter 11 bankruptcy. A plan would shut down the operations of a filer and sell the assets that remain so the creditors can have at least received a portion of the debts owed. Liquidation may be better under Chapter 11 than Chapter 7 as the debtor who is in possession and their creditors have greater say over the execution of the Chapter 11 plan.

Source: https://upsolve.org/learn/what-is-chapter-11-bankruptcy

When dealing with Chapter 7 and Chapter 11 bankruptcies, the shareholders of the companies doing the filing are not likely to see returns on their investments. That said there are still some major differences. Read on to learn more.

Chapter 7 Bankruptcy

Also called “Liquidation Bankruptcy” At this stage firms are past the stage of reorganization and have to sell off any assets that are not exempt to satisfy creditors. Debts are collected according to “absolute priority” rules and a trustee make sure assets are sold and the funds distributed to the appropriate creditors. To obtain Chapter 7 relief a debtor may be an individual, a corporation or a small business. They are not allowed to proceed with bankruptcy if they have had a previous bankruptcy application dismissed within the previous 180 days should they not have made an appearance in court. When assets are sold the remaining debt is usually forgiven.

Chapter 11 Bankruptcy

Also called a “reorganization” or sometimes a ‘rehabilitation” bankruptcy. Available for nearly everyone, there is no debt limit and no income requirements. It is more complex and generally more expensive. It permits the firm to reorganize their debt by contacting its creditors to change the loan terms. It is initiated with a petition filing and according to The Small Business Reorganization Act of 2019 makes this form of bankruptcy more accessible for small businesses. To quote the act: “defined as entities with less than about $2.7 million in debts that also meet other criteria,”  it goes on to state: “imposes shorter deadlines for completing the bankruptcy process, allows for greater flexibility in negotiating restructuring plans with creditors, and provides for a private trustee who will work with the small business debtor and its creditors to facilitate the development of a consensual plan of reorganization.” Recently the Chapter 11 Subchapter V debt limit has been increased by President Donald Trump to $7,700,000 for cases filed following the CARES act.

Chapter 7 Vs. Chapter 11

Both Chapter 11 and Chapter 7 bankruptcy requires a trustee who will supervise the assets belonging to the debtor to ensure the continuation of business. In Chapter 11, debt is not absolved but if successful it is expected the business will continue to operate. When that is not possible the next step is liquidation and Chapter 7 bankruptcy.

Source: https://www.investopedia.com/ask/answers/differences-between-chapter-7-and-chapter-11/