Why Debtors Choose Reorganization Bankruptcy
Any individual or business currently considering bankruptcy should know about different types of bankruptcies, and their relative benefits and limitations. There are several types of reorganization bankruptcy that may be available to individuals and businesses based on their particular circumstances. While each type of reorganization bankruptcy has its own processes and distinctions, the overall aim of all reorganization bankruptcies is to allow a debtor to reorganize debts. Why do debtors choose reorganization bankruptcy over liquidation bankruptcy? Consider some of the following information from the West Palm Beach bankruptcy attorneys at Kelley, Kaplan & Eller.
Automatic Stay Protects You Immediately and Can Allow You to Retain Secured Assets
Debtors often choose a reorganization bankruptcy because of the automatic stay, and its combined power with the repayment plan. What do we mean? Consider this: the automatic stay is an injunction that immediately stops creditors or debt collectors from taking any new action or continuing any ongoing debt-collection action against you once you file for bankruptcy. Then, combined with the repayment plan that you will follow, the automatic stay can actually allow you to keep secured assets. Most often, this benefits individuals who file for Chapter 13 bankruptcy and are facing foreclosure. The automatic stay, and the terms of the repayment plan, give the debtor an opportunity to get back on track with mortgage payments and to keep their home.
Power to Catch Up with Creditors
Reorganization bankruptcies are also common and popular because they give debtors the opportunity to catch up with creditors and to get back on track financially. Over the course of the repayment plan (up to five years for an individual in a Chapter 13 case), debtors can become current with creditors.
No Asset Liquidation
Reorganization bankruptcies, unlikely liquidation bankruptcies, do not require the liquidation of any assets. Accordingly, individuals and businesses alike are able to retain all of their assets without worrying about liquidation in a Chapter 13, Chapter 11, Subchapter V, or other type of reorganization bankruptcy.
Ability to Keep Your Business Open, If You Are a Business Owner
Business debtors often choose a reorganization bankruptcy because this type of bankruptcy allows the debtor to keep their business open and to continue running it during and after the bankruptcy case.
Possibility of Converting to Chapter 7 if Reorganization Does Not Work Out
Many debtors want to take advantage of the benefits of a reorganization bankruptcy, whether it is to prevent foreclosure and remain in their homes or catch up with creditors and keep a business open and operational. Yet reorganization bankruptcies do not always work out — either for individuals or for businesses. If your situation or circumstances change, it may be possible to convert your case to a Chapter 7 liquidation bankruptcy instead.
Contact Our West Palm Beach Bankruptcy Lawyer Today
Whether you are considering a reorganization bankruptcy, are ready to begin working on your bankruptcy petition, or have more general questions about bankruptcy options in South Florida, one of the experienced West Palm Beach bankruptcy lawyers at Kelley, Kaplan & Eller can help. Contact our firm today to learn more about the bankruptcy services we provide to individuals and businesses in the West Palm Beach area.
Source:
law.cornell.edu/uscode/text/11
