FAQs For Chapter 11 Bankruptcy in Florida
In Jacksonville, Chapter 11 bankruptcy laws are consistent with elsewhere in the state of Florida in that they are designed to help businesses reorganize while still operating. In simplest terms, a company in Chapter 11 reorganization develops a plan to pay creditors over time, subject to the approval of a court-appointed trustee. This is an important tool that many enterprises use to manage debt and they ultimately continue on to future solvency and success.
In current economic conditions, it is not at all unusual to seek Chapter 11 bankruptcy help. As bankruptcy attorneys, we think we are your best choice for finding answers, beginning with these FAQs.
Chapter 7, 11 & 13 Bankruptcy Frequently Asked Questions
How do chapters 7 and 13 differ from Chapter 11?
- Chapter 7 is a liquidation, a complete sell-off of assets, proceeds of which are divided by the court among creditors. This is available to businesses and individuals.
- Chapter 13 is a pay-off or “wage-earner” strategy, largely pursued by individuals who are behind in house or car payments. A Chapter 13 program is pursued where the debt is secured (e.g., house title) while the individual, who can demonstrate income cash flow, pays down outstanding debt over three to five years.
- Chapter 11 bankruptcy is similar to Chapter 13 in that it is designed to keep a business intact. As the business reorganizes financial circumstances, debt reduces through paying off creditors over time. This is done under supervision of the court-appointed trustee, although the debtor-filer is largely in control of the business’s day-to-day operations.
Can individuals file for Chapter 11 bankruptcy?
Individuals with large debt can also file for Chapter 11 bankruptcy instead of Chapter 13. They choose to do so often, because it affords them greater flexibility. However, Chapter 11 involves higher legal and court fees and greater reporting requirements.
Are debts to the IRS applicable in Chapter 11 protection?
Filing for Chapter 11 bankruptcy allows a business to halt federal tax collections against a business under Bankruptcy Code 362. The plan can even enable the re-opening of a business that has been previously seized by the IRS.
If a business owner still chooses to liquidate, can Chapter 11 make sense?
Yes, Chapter 11 bankruptcy filings might be a smart move for a business that wishes to close in an orderly fashion, on your own terms.