Bankruptcy - Chapter 11 Bankruptcy

Chapter 11 Bankruptcy is also known as a reorganization bankruptcy. Assuming that you are an individual debtor who owns a small business, or works as an independent contractor, Chapter 11 will be much more complex and expensive than Chapters 7 and 13. During 2009, many banks filed for bankruptcy, and you may remember hearing or reading that trustees came in and took over the whole business. However, in most cases this won’t happen to you. You can remain a so-called “debtor in possession” while you operate the business and fulfill some of the required duties of a trustee. However, a U.S. Trustee appointed by the court will monitor the process.

Generally, a small business case proceeds faster than other chapter 11 cases. Additionally, under chapter 11, the debtor in possession is allowed to liquidate the business, which is more economically beneficial than a chapter 7 liquidation plan. As in other chapters, there are certain debts that will not be discharged, such as unpaid taxes, alimony, or child support, and government loans. On the other hand, the money in your retirement accounts such as IRA’s and 401(k)’s is protected. Therefore, when you see that bankruptcy is inevitable, do not cash these out to pay any debt that can be discharged during the bankruptcy.

Before you can file for chapter 11 you must receive credit counseling from an approved agency within 180 days before filing. Their certificate of completion must be filed with the court along with a copy of your debt management plan. Schedules of assets and liabilities, income and liabilities must be included. Some required official statement forms are not available from the court, but they can be downloaded at www.uscourts.gov.

Chapter 11 is not cheap. You will face attorney’s fees at the onset because a bankruptcy lawyer should be consulted before you file. Chapter 11 is also more complex with so many intricacies that the services of an experienced bankruptcy attorney are necessary. The court will charge $1000 as a case filing fee and a small additional administrative fee. However, these may be paid in installments. During the bankruptcy process you will also have to pay quarterly fees to the trustee until the case is dismissed.

Before you make your decision, contact Fast Track and discuss your situation with one of their specialists. There may be a way you can settle your debts without going through the painful bankruptcy process. For individuals who would rather settle their debts, the Fast Track program provides ethical and dedicated service.

When we start your plan we establish an affordable monthly payment which is deposited in a settlement account in your name. Once you have the required funds in your settlement account, we will contact your creditors and make settlement offers. We will continue to work with them until all debts in the plan have been settled. Fast Track’s goal is to settle all debts in the plan for 40%-60% of what you owe.