Chapter 11: Business Reorganization [Chapter 11]

Filing fee $1,717

Chapter 11 is designed for the reorganization of large amounts of debt. Typically, Chapter 11 is used by business that need to address their debts but can also be for an individual whose debts exceed the debt limit for a Chapter 13. This Chapter is the only alternative for someone who needs to reorganize their debts but is above the Chapter 13 eligibility maximums. Unlike a Chapter 13, there is no maximum cap for the length of a Chapter 11 plan. Although there is no maximum “cap” for the duration or length of a plan there is however, a sizeable amount of “red tape.” A few good examples include, but are not limited to, the following: Debtors cannot sell assets without Court permission; Creditors have the right to vote on whether to accept a debtor’s plan; Creditors themselves have the right to propose their own plan; Debtors may only maintain a checking account at a banking institution that meets very specific criteria; and Debtors must obtain a federal tax ID number, regardless of the state they live and work in. In addition to all that, Debtors must also file operating reports with the Court on a monthly basis as well as pay a quarterly fee to the Office of the U.S. Trustee.

Advantages:

• Debtors typically are permitted get to keep their assets. There are, however, exceptions to this.

• Similar advantages as a Chapter 13; including the stopping of foreclosure sales, garnishments, repossessions, state court actions to recover debt, and other collection efforts

Disadvantage:

• Much more expensive than Chapter 7 and Chapter 13 by a significant margin. This is because a Chapter 11 requires more time and effort from both the Debtor and the attorney. Often times, the attorney fees alone are well over $25,000.00