Filing A Chapter 11 Bankruptcy In Texas
The following article will cover:
- Chapter 11 Bankruptcy: Explaining the purpose of Chapter 11 bankruptcy, its applicability to businesses and individuals, and its focus on debt restructuring through a plan of reorganization.
- Benefits of Chapter 11 Bankruptcy: Discussing the advantages of filing for Chapter 11 bankruptcy.
- Bankruptcy Protections: Addressing the various ways bankruptcy can help individuals.
What Is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is a form of bankruptcy primarily intended for businesses. However, it is not exclusive to businesses as individuals can also opt for Chapter 11. The central aim of Chapter 11 is to restructure debts through a plan of reorganization, which proposes repaying creditors from the future net profits of the business. This process concurrently safeguards the debtor and the debtor’s assets from creditors.
Who Is Eligible To File For Chapter 11?
Chapter 11 bankruptcy is most commonly filed by business entities, such as corporations or limited liability companies. However, individuals can also file for Chapter 11 bankruptcy if their circumstances warrant such an action.
Why Do Individuals Or Companies Choose To File Chapter 11?
The primary motivation for filing Chapter 11 is often to secure protection from creditors and safeguard assets while restructuring the business. This restructuring process involves formulating a plan to repay creditors using future net operating income, providing a lifeline for distressed businesses.
What Are Some Examples Of Creditor Harassment That A Debtor Has Commonly Experienced? Can Bankruptcy Help Stop Them?
In any bankruptcy filing, including Chapter 11, an automatic stay comes into effect immediately upon filing. This automatic stay functions as an in-court injunction, preventing creditors from initiating or continuing actions against the debtor or the debtor’s property. As such, it effectively halts creditor harassment.
Can Bankruptcy Still Help Me If A Lien Has Been Filed Against Me?
Yes, in certain circumstances, bankruptcy can help even if a lien has been filed against you. Some liens can be avoided by the bankruptcy court. If the lien is not avoidable, it typically remains intact, but the debtor often retains the property subject to the lien. This is possible because the debtor proposes a plan to restructure the debt and bring the account current.
Can Bankruptcy Help Stop Or Reverse A Repossession?
Yes, filing for bankruptcy invokes an automatic stay, which in most cases halts repossession processes, depending on the timing of the repossession. The bankruptcy court may even direct the creditor who has repossessed the asset to return it to the debtor or the bankruptcy estate.
How Can Bankruptcy Help Me If I Am Being Foreclosed On?
When you file a bankruptcy petition, an automatic stay comes into effect. This stay is a court injunction that stops creditors from proceeding with foreclosure. Once you’ve filed for bankruptcy and the creditor has been notified, they are legally required to halt all foreclosure proceedings. This stay provides an opportunity to formulate a plan to address the underlying debt. For more information on Filing A Chapter 11 Bankruptcy In Texas, an initial consultation is your next best step.