If you are struggling with debt in Kentucky and need the space and opportunity to get back on your feet without losing your most valued assets, you can apply for Chapter 11 bankruptcy. Given its manner of working, the process of filing for this bankruptcy is slightly different compared to Chapters 7 and 13.
Understanding Chapter 11
Under Chapter 11 bankruptcy, also called “reorganization” bankruptcy, filers are able to keep their property and continue operating their business while they develop a plan to repay their debts. This type of bankruptcy is available mostly for business owners, but individuals or entities with a large amount of debt can also file for Chapter 11.
How it works
Once you file a petition with the bankruptcy court, an automatic stay goes into effect. This means that creditors won’t be able to pursue collections against you during your bankruptcy case. You will need to work with the court to develop and propose a repayment plan, which your creditors will vote on. If they approve your plan, you’ll make payments to a trustee, who will then distribute the funds to your creditors according to the terms of your plan.
Benefits of filing for Chapter 11 bankruptcy
The primary objective of commercial bankruptcy is to stabilize the debtor, so he or she can keep operating and pay creditors over time. As a debtor, the bankruptcy court will provide you with breathing room from creditors’ demands and allow you to develop a repayment plan.
Drawbacks of filing for Chapter 11 bankruptcy
Chapter 11 bankruptcy is a complex process, and it can be expensive. In addition, the process can take a long time to complete, which may not be ideal if you’re struggling to keep your business afloat.
Deciding whether Chapter 11 is a good fit for you will depend on your specific circumstances and financial goals. For instance, if you’re struggling to keep your business and need some time to restructure your debts, Chapter 11 may be a good option. However, if you’re an individual with a large amount of debt and few assets, Chapter 7 bankruptcy may be a better fit.