What is the difference between Chapter 7 and Chapter 11?

Chapter 7 and Chapter 11 bankruptcy law are both filing options in Virginia. The main difference between these two types of bankruptcy is the purpose and outcome of the filing. Chapter 7 bankruptcy is known as liquidation bankruptcy. This type of bankruptcy allows debtors to discharge most of their debts and wipe the slate clean. In this scenario, debtors are required to surrender any assets that are not exempt from sale. Creditors are then paid out of the proceeds from the sale of these assets. Chapter 11 bankruptcy is known as reorganization bankruptcy. This type of bankruptcy allows debtors to retain assets and restructure their debts. This type of bankruptcy does not require a full surrender of assets. Instead, debtors can create a plan to repay creditors over time. This type of bankruptcy also allows debtors to renegotiate their debts if needed in order to make payments more manageable. Overall, Chapter 7 bankruptcy allows debtors to wipe the slate clean while Chapter 11 bankruptcy allows debtors to stay active financially while restructuring their debts. Depending on the situation, either type of bankruptcy filing can be beneficial to debtors in Virginia.

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What is the difference between Chapter 7 and Chapter 11?

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