What is the difference between a Chapter 11 and a Chapter 13 bankruptcy?

The difference between a Chapter 11 and a Chapter 13 Bankruptcy in Virginia lies in the way the repayment process is handled. In a Chapter 11 bankruptcy, the debtor’s assets are liquidated and the proceeds used to pay creditors, while the debtor’s remaining debt is eliminated. This type of bankruptcy is ideal for businesses that need an organized way to settle their debts and continue operating. This type of bankruptcy is usually more expensive and complicated than other forms of bankruptcy, because it requires negotiated settlements with creditors, court filings and hearings, and the formation of a creditors’ committee. In a Chapter 13 Bankruptcy, the debtor enters into a repayment plan with creditors in which a portion of the debt is repaid over three to five years. This type of bankruptcy allows debtors to keep their assets, and is especially helpful for people who have a steady income but are behind on their debt payments. The repayment plan is supervised by the bankruptcy court, and the creditors have to agree to the plan. If the debtor fails to make payments as required, the court can liquidate the debtor’s assets to pay off the debt. Chapter 11 and Chapter 13 bankruptcies both offer relief from debt in Virginia, but the manner in which debt is handled is significantly different. Chapter 11 is most useful for businesses that need to reorganize their debt in order to continue operations, while Chapter 13 is best suited for individuals who are behind on their payments and need help to catch up.

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What is the difference between a Chapter 11 and a Chapter 13 bankruptcy?

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