What is the difference between Chapter 7 and Chapter 11?

Chapter 7 and Chapter 11 bankruptcy laws in West Virginia are both forms of legal protection from debtors. However, the two types of bankruptcy are very different. Chapter 7 bankruptcy is a liquidation bankruptcy, meaning that most of the debtor’s assets are sold off in order to pay off creditors. This type of bankruptcy is usually utilized by individuals with few assets and unable to pay off their debts. It is also known as a “straight bankruptcy” and requires the debtor to submit a list of their assets and liabilities to the court. Chapter 11 bankruptcy is known as a reorganization bankruptcy and is typically used by businesses who need more time to make payments to creditors. In this type of bankruptcy, the debtor is given the chance to create a repayment plan. This plan is then scrutinized and, if found to be feasible, is approved by the court. The approved plan creates a new agreement between the business and creditors, which includes reduced payments and interest rates. The main difference between Chapter 7 and Chapter 11 bankruptcy is that Chapter 7 is a liquidation bankruptcy and Chapter 11 is a reorganization bankruptcy. Chapter 7 requires the debtor to relinquish most of their assets, while Chapter 11 gives the debtor the ability to create a repayment plan in order to satisfy creditors.

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What is the difference between Chapter 7 and Chapter 11?

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