Kentucky businesses looking to restructure their debts may benefit from filing for Chapter 11 bankruptcy. Chapter 11 bankruptcy may also be an option for individuals who have too much debt to qualify for a Chapter 13 proceeding. Unlike a Chapter 7 case, filing for Chapter 11 protection allows a company to continue operating while it seeks to cut costs or make other moves to help it remain competitive.
An overview of the reorganization plan
When you file for Chapter 11 protection, you must propose a reorganization plan. It can only be approved if it is formed in good faith and complies with all applicable laws. A judge may confirm your plan even if creditors object. Creditors might object if they are asked to take less than what they are owed or are asked to forgive the entirety of an outstanding balance.
Chapter 11 for individuals
As a general rule, Chapter 11 is only an option if you have the ability to earn significant amounts of money. For example, if you expect royalties from a book deal or deferred payments from a previous business deal, a Chapter 11 case may be for you.
Take advantage of the automatic stay
One of the key benefits of filing for bankruptcy protection is receiving an automatic stay of creditor collection activities. This means that your existing creditors can’t contact you about your debt or take actions such as filing lawsuits to get what they are owed. It is important to note that any debts incurred after you file will not be subject to this stay. Furthermore, the stay can be lifted if the judge in your case believes that there is reason to do so.
Filing for bankruptcy may allow you to reduce or eliminate both secured and unsecured debts. If you file for business purposes, it may allow you to continue running your business while the reorganization takes place. If you file for an individual reorganization bankruptcy, you may be able to seek a cramdown of certain debt balances.