CALL US NOW:
Bankruptcy Chapter 11
Chapter 11
is typically used for individuals or businesses that have significant assets, have too much debt to reorganize under a Chapter 13 case, do not qualify as an individual under Chapter 13 such as a corporation, and who do not wish to liquidate their assets. The typical use of Chapter 11 is for corporations that wish to remain in business but need protection while they reorganize their debts. This is usually not a proper choice for individuals and small businesses because of the enormous expense involved in pursuing a successful Chapter 11 reorganization.
Reasons for Filing Bankruptcy Chapter 11
- To Stop Garnishment and Avoid Liens
Most debts must be reduced to a judgment through a lawsuit before they can be collected through garnishment or lien. Certain governmental agencies collecting taxes and student loans can create liens against Debtor property and garnish Debtor wages without first filing suit. Hospitals can create liens without first filing suit. Most other debts must be reduced to a judgment prior to garnishment.
The filing of a bankruptcy stops collection of debts through garnishment and in many cases can result in the avoidance of any liens against property.
- To Stop Lawsuits
The filing of a bankruptcy stops any further action in a lawsuit unless the creditor is able to obtain relief from the automatic stay. This relief is not easily obtained and in most instances the lawsuit will be stayed until the debt is discharged in bankruptcy. Upon discharge, the lawsuit will have to be dismissed.