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

The difference between Chapter 7 and Chapter 11 bankruptcy lies primarily in the type of debt that can be discharged under each chapter. Chapter 7 bankruptcy, also known as liquidation bankruptcy, is usually used for individuals or small businesses who are unable to pay their debts. Under Chapter 7, debtors may be able to discharge most unsecured debt, such as credit card debt or medical bills. However, secured debt, such as a mortgage or car loan, are not typically discharged. On the other hand, Chapter 11 bankruptcy is typically used by larger businesses and corporations. Under Chapter 11, debtors reorganize their debts, allowing them to restructure and pay off their debt over time. This allows them to keep their property and continue doing business, all while paying back creditors. Under North Carolina law, corporations, partnerships, and individuals are eligible to file for either Chapter 7 or Chapter 11 bankruptcy. The decision to choose one over the other generally depends on the size and nature of the debt and the debtor’s ability to make payments on the debt over time. Furthermore, the decision to file for bankruptcy is always an important one and debtors are advised to consult an experienced bankruptcy attorney before filing.

Related FAQs

Is there a cost associated with filing for Chapter 7 Bankruptcy?
What is the difference between Chapter 7 and Chapter 11 Bankruptcy?
How do I know if I am eligible for Chapter 7 Bankruptcy?
How long does it take for the bankruptcy filing to be finalized?
Will I have to appear in court to file for Chapter 7 Bankruptcy?
How long does the bankruptcy stay on my credit report?
What happens to my debts when filing for Chapter 7 Bankruptcy?
Is there a time limit on filing for Chapter 7 Bankruptcy?
What is a nondischargeable debt?
Is there a way to avoid repaying certain creditors when filing for Chapter 7 Bankruptcy?

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

Related FAQs

Related Blog Posts