How does Chapter 11 bankruptcy work?

Whether you have filed for Chapter 11 bankruptcy on your own merit or your creditors have submitted a petition for bankruptcy on your behalf, you may be wondering what the process entails. If you are going to file for bankruptcy in Illinois, you will need to submit several documents. This includes a list of all your assets and liabilities, your current income, a statement of financial affairs and any contracts and leases you may have. You must also take a credit counseling course before the bankruptcy will be considered.

As soon as your paperwork is filed, you will assume the title of debtor in possession, which allows you to maintain control of your business, assets and property during the bankruptcy process, according to the U.S. Courts. It also requires you to act as a trustee over your case, in reorganizing your debt so that you can repay your creditors. In most cases you will remain debtor in possession until the plan for repaying your debt has been approved or until your case for Chapter 11 bankruptcy is switched to a Chapter 7 or Chapter 13 bankruptcy. Although it is not common, your case may be turned over to a court-appointed trustee under certain circumstances. This may happen when the debtor in possession is found to be engaged in incompetence, fraud, gross mismanagement or dishonesty.

Chapter 11 bankruptcy can help you reorganize your business debt so that you can repay your creditors and possibly keep your business and property. There are many options for people who are overwhelmed with their finances and need help repaying their debt.

This should be taken as general information and not as legal advice.

 

 

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