Chapter 11 Bankruptcy in Virginia

When you think of Chapter 11 bankruptcy, you probably think of big corporations filing these types of cases, such as Toys-R-Us or Chrysler. But sometimes individuals need to file Chapter 11 as well. Why would an individual file Chapter 11 instead of Chapter 13?

Typically the reason is because that person has too much debt to qualify for Chapter 13 bankruptcy. To be a Chapter 13 debtor, you can’t have more than $1,257,850 in secured debts such as houses and cars, or $419,275 in unsecured debts such as credit cards, student loans or taxes. So if you have several houses with large mortgages you might now qualify for Chapter 13. Likewise, if you owe a lot in student loans and taxes, you might now qualify.

The Chapter 11 Bankruptcy Process

Unlike Chapter 7 or 13, there is usually no trustee in Chapter 11. You are the “debtor in possession” and you have duties to your creditors to preserve your property to pay them as much as possible. In Chapter 13, a plan must be filed with the court within 2 weeks of filing. However, in Chapter 11, it is not unusual to file a plan several months after filing as negotiations with creditors take place.

In Chapter 13, the plan needs to get by the trustee’s objections, if any, and then it will typically be approved by the court. Since there is no trustee in Chapter 11, the creditors themselves actually vote on the plan through a complicated process on whether to approve it or not.

Chapter 11 Bankruptcy Costs

The costs of Chapter 11 bankruptcy are typically much higher than in Chapter 13. As you can see on the front page of our web site, we charge a flat fee for Chapter 13. However, in Chapter 11 cases, attorneys must bill their time on an hourly basis and have those fees approved by the court. Because of the work involved, Chapter 11 can cost twice as much or more than Chapter 13.

If you’re not sure if Chapter 7, 11, or 13 is right for you, make an appointment to come in and talk to us soon to figure it out. We offer FREE  phone, in-office or virtual appointments,