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

The main difference between a Chapter 11 bankruptcy and a Chapter 13 bankruptcy in Minnesota is how the debts are handled. In a Chapter 11 bankruptcy, also known as a reorganization bankruptcy, debt is typically reduced and reorganized by the court. This type of bankruptcy requires the debtor, the person filing for bankruptcy, to work with their creditors to create a repayment plan. A payment plan is created with the court’s approval that the debtor must follow. While in a Chapter 11, all of the debtor’s assets may be liquidated and a Trustee is appointed to oversee the repayment plan. On the other hand, in a Chapter 13 bankruptcy, also known as a wage earner’s plan, the debtor does not have to sell off assets. Instead, the court creates a three- to five-year repayment plan that the debtor must follow. The debtor’s wages are adjusted so that a certain percentage of their income goes towards debt repayment. All creditors involved get a portion of the debt repaid according to the repayment plan. While the debt reduction and repayment process are similar among Chapters 11 and 13, the main difference is in how the debt is handled and the payment plan created. Chapter 11 requires the debtor to work with creditors to create a repayment plan, while Chapter 13 allows for a court-mandated repayment plan.

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

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