You hear about big companies, GM, the airlines, et cetera, filing Chapter 11 to re-organize while they keep operating.
But small businesses, even individuals, can file Chapter 11. It cost more than other chapters, and there is a boatload of paperwork, but it gives you greater control.
Unless the court appoints a trustee, which is rarely done and only for specific statutory reasons, you will be the trustee of your case, what is called the . That means you keep your business running, whether it is renting out houses or commercial property, operating a store, whatever it is.
Unlike Chapter 13, you have at least 120 days, maybe more, to file your plan dealing with creditors. And you are not bound by the 5 year chapter 13 limit on plan length.
There is a debt limit for filing Chapter 13; if you owe more than that, $383,175 as of April 1, 2013, you can still file a Chapter 11 case.
With the bursting of the housing bubble, lots of folks are hundreds of thousands of dollars underwater on their homes.
I have several clients who borrowed to the hilt while that bubble was inflating. Everyone says it was the best thing to do; take that cash out of your house and put it to use! Home prices always go up! Interest rates will stay down!
If you are under the Chapter 13 unsecured debt limit, currently $, if your home is worth less than the balance on the first mortgage, you can get rid of the second mortgage, if you successfully complete your Chapter 13 bankruptcy plan.
If you are over that Chapter 13 limit, you can still get the same relief through a Chapter 11 bankruptcy. You still have to complete the bankruptcy plan payments, and the second mortgage lien will be discharged at the END of your five year plan. Five years is the MINIMUM for individual Chapter 11 cases.
Lots more involved; contact me if you have questions.