Chapter 11 Bankruptcy Lawyer for Individual Reorganization Plans
While the vast majority of Chapter 11 cases are filed on behalf of business entities, individual debtors are also eligible to seek protection under this Chapter. Unlike a Chapter 7 or Chapter 13 plan, there are no eligibility requirements or restrictions.
The decision to file for bankruptcy remains a difficult one for people who were once able to pay monthly bills easily. It’s essential to consult with an experienced Chapter 11 personal bankruptcy lawyer in Florida because the process often proves complicated, and missteps can result in a filing’s being rejected by the courts. Errors and insufficient documentation may leave everyday people with debt they might otherwise have discharged.
It may seem disheartening to admit that we live in a world where things beyond our control force otherwise responsible people to file Chapter 11 individual bankruptcy. Working hard and frugally conducting your affairs sometimes cannot offset economic disruption, job losses, medical conditions, or a devastating injury. Those are just some of the reasons the government put personal bankruptcy Chapter 11 laws in place. It would be fundamentally unfair for good people to suffer under the yoke of debt due to no fault of their own.
At the Adam Law Group, our experienced Chapter 11 bankruptcy lawyer will guide you through the process so that you can regain your financial health and well-being. Call us today at (904) 329-7249 to get started.
What’s the Difference Between Chapter 7 & Chapter 11 Individual Bankruptcy?
While it’s true that Chapter 7 generally ranks among the most used types of debt elimination filings, it may not be suitable for everyone. Chapter 7 filings typically fast-track the asset liquidation process to pay down debts. Once your holdings have been sold to pay off financial obligations, the remainder can usually be purged in many cases. In other ways, the Chapter 7 route favors people who have limited assets and very little to lose. This is not necessarily the case with a personal bankruptcy Chapter 11 situation.
Although a common myth persists that Chapter 11 is exclusively used for businesses, it remains a powerful resource for individuals with substantial assets to protect. Much like its function as a business debt reorganizational option, those same types of flexibilities can be extended to support a personal bankruptcy Chapter 11 filing. Under the right circumstances, people can weather the debt storm without having to liquidate assets required under Chapter 7.
What’s the Difference Between Chapter 13 & Chapter 11 Individual Bankruptcy?
In legal circles, Chapter 13 is commonly known as a “wage earner’s” reorganization recovery plan. People who continue to enjoy steady and reliable income can put forward a plan to pay down debts incrementally. This plan must be approved by the courts and typically allows wage earners to make payments, without losing assets, for 3-5 years. A court-approved Chapter 13 filing prevents creditors from seizing and liquidating assets or engaging in harassing collection practices. But federal law places certain limits on Chapter 13 filings. They include the following.
- Unsecured debt must be lower than approximately $394,725.
- Secured debt cannot exceed approximately $1,184,200.
Although these amounts are routinely adjusted in conjunction with consumer price indexes, the key point is that Chapter 13 has its limits. People who have higher debt thresholds and prefer not to lose many of the assets they worked hard for can pivot to Chapter 11. They can submit a plan that meets the guidelines regardless of debt. Essentially, the Chapter 11 repayment plan prevents you from losing everything to solve a potentially temporary debt-to-income problem.
Benefits of Filing a Personal Bankruptcy Chapter 11 Plan
It’s not uncommon for wealthy people and celebrities to file Chapter 11 when their debt thresholds exceed the Chapter 13 limitations. The splashy headlines regarding household-name individuals do not necessarily mean the flexible option isn’t the best solution for people simply with good incomes as well. Working with an experienced Chapter 11 bankruptcy lawyer can deliver the following benefits:
- Gain time to make mortgage arrearage payments
- Reduce a creditor’s automobile lien
- Overcoming recent debt discharge
- Time to deal with non-dischargeable debt
- Reorganization of debt
- No debt limit or means test.
Gain Time to Make Mortgage Arrearage Payments
If you have fallen way behind on primary residence mortgage payments, Chapter 7 may not rescue your home. Although qualifying Chapter 13 candidates can put forward a plan to repay the arrearage over 3-5 years, that may not solve the issue. Such plans often require struggling people to make monthly payments as well as onerous outstanding ones. That scenario can exceed a person’s ability to meet the plan’s guidelines, and it could fall apart. A Chapter 11 filing may not push your monthly repayment thresholds as high. That’s largely because Chapter 11 reorganization plans can stretch out mortgage arrearage beyond five years.
Reduce a Creditor’s Automobile Lien by Filing Chapter 11 as an Individual
One of the little-known caveats of a Chapter 11 filing involves automobiles and fair market values. In a Chapter 11 filing, a vehicle financed with 910 days of the filing cannot reduce the balance of an asset with declining value. Say you bought a new car for $50,000 one year ago, and its current value decreased to $30,000. Under Chapter 13, you are stuck with the $50,000 value. But under Chapter 11, the lower value at the time of the petition holds sway and may reduce the person’s repayment obligation. That’s one way an experienced chapter 11 bankruptcy lawyer can put otherwise obscure details of the bankruptcy code to work for you.
Overcoming Recent Debt Discharge
If you suffered a financial shortfall in the past few years that prompted a Chapter 7 or Chapter 13 filing, it’s highly unlikely the court would allow a re-filing of any kind. Chapter 7 does not allow a second filing within four years of the last petition or the debt discharge date. Chapter 13 usually limits another filing within two years. It often comes as a relief when unanticipated circumstances derail people’s financial health to know that Chapter 11 individual bankruptcy could remain on the table. A skillfully crafted petition with a repayment plan that passes court muster could prevent creditors from taking your assets and selling them off.
Time To Deal with Non-Dischargeable Debt
It’s important to understand that not every debt can be discharged through bankruptcy. Things such as child support, alimony, payroll taxes, and others cannot be purged. Even if a business closes, those payroll taxes could follow you as personal debt. One of the extraordinary reasons Chapter 11 proves so helpful is that you can tap the brakes. Chapter 11 petitions can prevent the Internal Revenue Service (IRS) from aggressively leveling ongoing penalties and fees that keep accumulating. In fact, a determined Chapter 11 bankruptcy lawyer may be able to broker a settlement deal with the IRS that allows you to reduce the amount owed and move on with your life.
Other Advantages for Individuals Filing under Chapter 11
Reorganization of Debt
In a Chapter 11 case, an individual debtor is granted the opportunity to propose a plan to reorganize his or her debts and pay off creditors. Unlike a Chapter 13 reorganization plan which has payment terms that are strictly governed by the Bankruptcy Code, a Chapter 11 reorganization plan affords the debtor flexibility. For example, plan payments under a Chapter 13 are restricted to either 3 or 5 years in length.
With Chapter 11, There is No Debt Limit or Means Test
In order to be eligible for a Chapter 13 bankruptcy case, the debtor must have regular monthly income; non-contingent, liquidated, unsecured debts of less $360,475; and non-contingent, liquidated, secured debts of less than $1,081,400. Chapter 11 does not have any debt restrictions. Further, a Chapter 7 debtor is subject to passing the means test. The means test is a multi-factored evaluation of an individual’s income compared with local and national averages. If an individual debtor’s income is too high, there is a presumption of abuse, which can prevent the debtor from receiving a discharge.
In many instances, after the confirmation of the plan, the Bankruptcy Court may grant a discharge to the individual debtor who has not completed payments under the plan if the value of property actually distributed under the plan to unsecured creditors is not less than the amount that would have been paid had the debtor liquidated under Chapter 7, and if modification of the plan is not practicable.
Find out how the advantages of filing Chapter 11 as an individual can help ease your financial stress. Talk to our team at Adam Law Group. Call us today at (904) 329-7249.
Force Lenders to Reduce Your Mortgage Principal through a Chapter 11 Cramdown
Florida ranks among the top five states in the country in percentages of properties “underwater” and in the amount that median home values have dropped. The numbers of properties worth less than their mortgages is staggering. Even for individuals owning just one rental property, filing individual Chapter 11 bankruptcy can save tens of thousands of dollars in principal reduction. This can be done by using the “Chapter 11 cramdown.”
How a Chapter 11 Cramdown Works
For rental, commercial, and personal property, the cramdown process can reduce the principal owed on the loan to what the property is currently worth (the “loan to value” ratio).
For example, an investor who purchased a condominium to use as a rental property several years ago owes $300,000 of principal on the note and has an approximate mortgage payment of $1,610 per month, exclusive of taxes and interests. Due to the collapse in the housing market, the condominium is now worth only $180,000 and the market rate for rental is $1,100. The condo is a toxic asset in that it is worth significantly less than the outstanding loan balance and it cannot generate net positive rental income.
A successful Chapter 11 cramdown can force the lender to reduce the principal to $180,000 and lower the interest rate. The new monthly payment under a cramdown could be $859 per month – which would turn the toxic property into a profitable investment again. If you think you are in a position to take advantage of this tactic, talk to our attorneys who help individuals file Chapter 11 bankruptcies by calling (904) 329-7249.
What Are the Steps in a Personal Bankruptcy Chapter 11 Case?
To say the bankruptcy bureaucracy can be difficult to navigate would be something of an understatement. A successful petition generally requires an experienced Chapter 11 bankruptcy lawyer to engage in negotiations with creditors and lien holders. Gaining their repayment plan support can help avoid objections and protracted litigation. The process also involves a series of crucial steps to be thoroughly completed to avoid setbacks or the court’s rejection of the Chapter 11 reorganization plan. These include the following.
Complete Credit Counseling Course: In an effort to reduce repeat filings, petitioners are required to complete a credit counseling course. To qualify for Chapter 11, and other filings, you must sign up for an accredited course and receive a certificate of completion. Many can be done online at your convenience.
Prepare The Chapter 11 Petition: A complete list of assets and debts must be compiled, and a Chapter 11 bankruptcy lawyer can walk you through the essential details. Verifiable income, ongoing expenses, and a concise summary of your financial status are generally required as part of the petition. In many cases, an experienced Florida bankruptcy law firm will comb through the details and verify their accuracy. Errors can result in significant and costly setbacks. Along with the standard Chapter 11 paperwork, these documents will be submitted to the court clerk with a filing fee. Once entered into the system, a stay to creditors will be issued, and the stressful calls, letters, and emails must stop.
Trustee Appointment: Judges overseeing Chapter 11 petitions usually require a trustee to handle the financial facets of the case. If money or asset transfers occurred within 90 days of the petition, the trustee may decide to void them. The reasoning involves certain creditors’ enjoying repayment benefits that others might not.
Proof Of Claim: After the Chapter 11 notifications issue and are published, creditors have the option of filing a proof of claim. These involve potential creditors that the Chapter 11 filing omitted or listed as disputed debts.
Meeting With Creditors: Your Chapter 11 bankruptcy lawyer, trustee, and creditors usually attend a meeting designed to work out differences and develop an acceptable reorganization plan. Although a proactive legal representative can resolve matters with reasonable third parties in advance, less cooperative individuals can raise objections. At the end of the day, a determined Chapter 11 bankruptcy lawyer can persuade them to accept practical repayment terms rather than waste their own money on fruitless litigation.
A final Chapter 11 reorganization plan typically must be filed with 120 days and gain approval within 180 days. Once the court signs off, you can keep valuable assets and make payments within a reasonable financial framework that maintains your quality of life.
Do You Need to File for Chapter 11 Personal Bankruptcy in Florida?
Filing for bankruptcy is a legal measure that helps you avoid losing everything or suffering under unmanageable debt for years. A personal bankruptcy Chapter 11 filing stops aggressive creditors and collection agencies from upending your everyday peace. If your income continues to fall short of monthly bills, it may be time to consult with a bankruptcy attorney and weigh your options. Call the Adam Law Group at (904) 329-7249 and schedule a Chapter 11 consultation and get the debt relief you deserve.