Chapter 11 bankruptcies are typically more complicated and are not offered by many bankruptcy attorneys due to their complexity. As such, it is important to select a qualified Scottsdale bankruptcy attorney with experience in Chapter 11 filings.
While most Chapter 11 filers are businesses, individuals may choose a Chapter 11 bankruptcy, typically to reorganize real estate investments or because the amount of unsecured debt is too high to qualify under Chapter 13.
For businesses, Chapter 11 will allow you to reorganize finances, eliminate some debt, and keep the business alive. This is unlike a Chapter 7 filing, which requires the liquidation of assets and results in the termination of the business.
A major advantage of Chapter 11 is to allow you to renegotiate terms in contracts such as interest rates or the dollar value of payments. Indeed, you may be able to sever contracts with existing service providers and execute new, cheaper contracts with other providers. Your Scottsdale bankruptcy lawyer can be an invaluable resource for you in identifying these opportunities.
Another significant advantage of a Chapter 11 filing is increased flexibility. Unlike other forms of bankruptcy, Chapter 11 filers have more control by being able to directly negotiate with creditors instead of having to proceed through a bankruptcy case trustee.
A Chapter 11 bankruptcy can also assist with past-due taxes. Through Chapter 11, a debtor can renegotiate a tax debt with the government to try to reduce the tax owed and/or restructure payment of the tax in order to permit the business to continue functioning.
Chapter 11 filings, however, have certain pitfalls you must avoid. It is important to consult immediately with your Scottsdale bankruptcy attorney in relation to your Chapter 11 filing. For example, the bankruptcy code requires you within a certain time limit to reaffirm a lease such as for office space, or you will be deemed to have rejected it. If the lease included favorable terms, your failure to act in a timely manner could well mean the loss of an under market lease and cause significantly increased expense to your business.