The majority of people who are compelled to declare bankruptcy select Chapter 7. In Chapter 7, the majority of the debtor's assets must be liquidated and the proceeds used to repay creditors. With a few exceptions, the remainder of the debt is discharged once the proceeds have been exhausted. Those with few assets relative to their level of debt typically choose this option. Others, however, may choose to retain their assets. This is especially true for small business proprietors whose companies are considered personal assets. For these individuals, Chapter 13 is an option. Chapter 13 enables the debtor to retain all or the majority of their assets, but a trustee has control of the assets until the debt is repaid in full.
Some individuals may find the concept of a trustee controlling their assets repulsive and unthinkable. Others may not qualify for Chapter 13 due to a high amount of debt, which is particularly true for small business owners with extensive assets. For these individuals, Chapter 11 is frequently the best or only option.
Chapter 11 enables the individual to maintain control over their assets. They may be eligible for quarterly or even semiannual payments, which are more compatible with business operations. In addition, there is no set time limit for the repayment of debts under Chapter 11. Under Chapter 13, the maximum repayment period is five years.
Chapter 11 is more expensive than Chapter 13, and its statutes are more complex, necessitating the assistance of an experienced Chapter 11 bankruptcy attorney. Paperwork requirements, if you are unfamiliar with them, can consume considerable time. In spite of this, many people still consider Chapter 11 to be their best option when confronted with the unfortunate circumstance of excessive debt.
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