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

Chapter 7 bankruptcy and Chapter 11 bankruptcy are two different types of bankruptcy proceedings that an individual or business can avail of in South Dakota. Chapter 7 bankruptcy is sometimes referred to as liquidation bankruptcy because it involves the liquidation of many of an individual’s assets in order to pay off their creditors. This type of bankruptcy is available to individuals and businesses, but the criteria for eligibility differ between the two. In Chapter 7 bankruptcy, a court-appointed trustee will set up a plan to liquidate assets in order to satisfy creditors. The debtor must pass a means test and will have to surrender non-exempt assets, which will be sold off in order to pay creditors. Once all of the assets are liquidated, the debtor is then free from their debts with no further obligation. On the other hand, Chapter 11 bankruptcy is a reorganization bankruptcy. It is available to both businesses and individuals and allows them to come up with a repayment plan with their creditors. Chapter 11 offers more flexibility than Chapter 7 in that it allows debtors to keep some assets and allows them to come up with a repayment plan that could even extend out over several years, as long as creditors agree to it. With Chapter 11, the debtor can remain in control of their assets while they are making repayments.

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

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