Why would I be compelled to submit Chapter 11 bankruptcy rather than Chapter 13?

What is the distinction between Chapter 7 and Chapter 13 Bankruptcy?

If you are incapable of fulfilling the means test and are ineligible for Chapter 7 bankruptcy, you might be eligible for Chapter 13 bankruptcy. However, Chapter 13 bankruptcy imposes debt limitations, so you will have to assess your debts and assets. If your unsecured debt amounts to $383,175 and your secured debt amounts to $1,149,525, you may have to pursue Chapter 11 bankruptcy. If you are obligated to file Chapter 11, it is advisable to promptly seek guidance from our bankruptcy attorney in Willowbrook.

Chapter 7, often referred to as Straight Liquidation, enables the discharge of unsecured debts like credit cards, medical bills, repossession deficiencies, and signature loans, facilitating a fresh start and financial independence. On the other hand, Chapter 13, also known as Debt Consolidation or the Wage Earners Plan, is primarily designed to halt foreclosures and repossessions, allowing individuals to catch up on missed payments through a 36 to 60 month repayment plan. In a Chapter 13, the consolidation of other debts is also possible, such as car payments, potentially reducing the payment to the car value alone rather than the entire loan balance. Additionally, tax debts, student loans, and child support or alimony arrears can be consolidated under Chapter 13.

Chapter 7 bankruptcies are “standard bankruptcies” that allow you to request the bankruptcy court to discharge most or all of your debts. In return for this discharge, the bankruptcy trustee is permitted to seize any property you possess, that is not exempt, and auction it off to reimburse your creditors.
In a Chapter 13 bankruptcy, you are submitting a repayment plan to the courts to repay a portion of your debts over a designated period, usually 36 to 60 months. The amount you will be required to pay is determined by your income, the property you own, and the types of debts you have.

If you meet the requirements for a Chapter 7 Bankruptcy, your unsecured debt ? like credit cards, medical bills, personal loans, and contractual obligations (such as cell phone bill, gym membership, etc.) ? will be forgiven. If you wish to retain secured debt like a car, house, boat, etc., you can choose to either keep making payments or surrender the property and eliminate the debt. Generally, the Chapter 7 Bankruptcy process takes around 3-4 months.