Liquidating chapter 11 bankruptcy
If a debtor wants to keep an item (Ex: house or car) which is security for a loan, he/she must continue these payments.
If the debtor wants to discharge that car loan, then he/she must surrender the car to the creditor that holds the lien.
One of the primary reasons that people choose a chapter 7 bankruptcy if they qualify under bankruptcy law and if they can afford the monthly payments on the items that they want to keep is the fact that a person can bring his/her credit score up much more quickly than if that same person filed a chapter 13 case, because he/she completes the bankruptcy case so quickly.
For more information about reestablishing credit after bankruptcy, see Bankruptcy and your Credit Rating.
What is the difference between filing bankruptcy under Chapter 7, under Chapter 13, and under Chapter 11 of the Bankruptcy Code?
Chapter 11: Chapter 11 is the chapter used by large businesses to reorganize their debts and continue operating.
Finally, if an individual or a husband a wife that are filing jointly have debt that exceeds certain limits, then chapter 13 reorganization is not an option.
These limits change every three years in April base upon the change in the cost of living since the last change.
Corporations, limited liability companies (LLCs) and partnerships are not allowed to file for relief under chapter 13, thus Chapter 11 would be the only option for these entities if the one of these types of companies needs to reorganize and continue its operations.
If any of these types of entities files for relief under chapter 7, the company must end its operations upon the filing of the case.
Chapter 13: In a Chapter 13 proceeding, the debtor must pay all or part of his debts from the future income over a period of three to five years through his chapter 13 plan.