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

Chapter 7 and Chapter 11 Bankruptcy are both types of bankruptcy that are available to individuals and businesses to help them manage their debt. However, there are some key differences between the two. Chapter 7 Bankruptcy is a form of bankruptcy that allows individuals or businesses to liquidate their assets in order to pay back debts. A trustee is appointed to oversee the case and ensure that creditors are paid back. In this type of bankruptcy, the debtors may not have to repay all of their debt, as some of it may be “discharged” (meaning the debt is no longer legally binding). In Illinois, Chapter 7 Bankruptcy is sometimes referred to as “straight bankruptcy” or “liquidation bankruptcy”. In contrast, Chapter 11 Bankruptcy is a type of bankruptcy where the debtors are able to reorganize their debt and create an affordable repayment plan. This type of bankruptcy is often used by businesses and provides them with an opportunity to restructure their debt so that they can still remain operational. The goal of Chapter 11 Bankruptcy is to give the debtor a chance to remain in business and pay off their debts over time. Overall, the main difference between Chapter 7 and Chapter 11 Bankruptcy is that while Chapter 7 liquidates assets to pay off debt, Chapter 11 allows for restructuring of debt so that the debtor can remain in business.

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

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