Bankruptcy Chapters Explained – Part 2

This post is part of a two part series on bankruptcy chapters. If you haven’t already read part 1, I recommend you do so before continuing.

Chapter 11 — Continued

The main advantage of Chapter 11 is that no trustee is appointed. Rather, the filer maintains control of their assets or their business throughout the process, becoming what is known as a Debtor in Possession. However, built into this advantage is also the main drawback to a Chapter 11 filing — complexity. A debtor in possession must file detailed, monthly reports which are scrutinized by the bankruptcy court. Chapter 11 bankruptcies, generally speaking, involve the most paperwork and legal fees of any chapter. Chapter 11 is most appropriate for an individual or business with solid financial fundamentals that needs some time or debt reorganization to get back to a state of better financial health.

Chapter 13

A Chapter 13 filing is appropriate for individuals with delinquent tax debts, mortgage debts, car loans, or child or spousal support debts. Generally speaking, these debts must be repaid in full, but a Chapter 13 filing can stop collection efforts and establish a payment schedule the debtor can afford. Meanwhile, a Chapter 13 filing can discharge unsecured debts like credit cards or personal loans, allowing the debtor to focus on meeting the obligations of their payment schedule. A Chapter 13 filing can allow a delinquent car loan to be rewritten. It can also stop enforcement action on past due child support or alimony, although the current support must be maintained.

Navigating bankruptcy for your benefit

Bankruptcy is usually a stressful process, but it need not be a nightmare. With a skilled bankruptcy lawyer on your side, it can be an opportunity to move past what has been holding you back financially, whether it be in your personal or business finances. Don Harris is currently the only attorney in New Mexico certified in both Consumer Bankruptcy Law and Business Bankruptcy Law by the American Board of Certification. Don will safeguard both your present and future throughout the bankruptcy process. Give us a call at New Mexico Financial Law today — our bankruptcy consultations are always free of charge.

We are a debt relief agency and have practiced bankruptcy law for a combined 50 years. Our services include helping individuals and couples file for bankruptcy relief under the Bankruptcy Code. 

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