What is the difference between Chapter 7 and Chapter 11 Bankruptcy?

Chapter 7 and Chapter 11 Bankruptcy are two types of consumer bankruptcy that people typically use when they need help managing their debt. In North Carolina, Chapter 7 Bankruptcy is a liquidation plan in which an individual can have their debts discharged in exchange for liquidating some of their assets. This means they sell off some of their assets to pay off their debts. Chapter 11 Bankruptcy is a more involved process which is typically used by businesses, and is sometimes used by individuals. In Chapter 11 Bankruptcy, the individual or organization seeking debt relief can maintain control of their assets while working out a plan to pay off their debts over a period of time. In this process, the individual or organization will work out a “plan of reorganization” with their creditors to reduce monthly payments and the amount of debt they owe. In summary, Chapter 7 Bankruptcy is a liquidation plan in which some assets are sold off to pay off debt and debts are discharged; while Chapter 11 Bankruptcy is a reorganization plan of action where monthly payments and the amount of debt owed are reduced.

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What is the difference between Chapter 7 and Chapter 11 Bankruptcy?

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