Chapter 11 Bankruptcy Fraud
Bankruptcy can be filed for in the court in three ways -- Chapters 7, 11 and 13. Each one has its own benefits, circumstances and conditions. Any person filing for any of these types to bankruptcy has to fill up a plethora of forms, and it is quite vigorous. Chapter 11 is best suited for people or businesses that have to be reorganized. For example, if a certain business is unable to pay its creditors, it can file for bankruptcy under Chapter 11 or Chapter 7. |
Chapter 11 allows the business to still function without liquidizing assets for paying the creditors. Certain time limit is set for the reorganization of the business, and the court oversees the reorganizing. The company gets some relief from the creditors, and time to restart the business.
While the company is reorganizing the creditors cannot contact the business and they have to approach them through the court. Creditors, who register in the court, will be heard at the court. There are different kinds of creditors again like secured and unsecured ones. They will be given preference accordingly in the court. All debts have to be incurred through the court once a business files for Chapter 11 bankruptcy. Chapter 11 also allows cancellation of certain debts like the unsecured loans. If by canceling the debt benefits financially, then the court would allow such a debt to be voided.
However, there are some individuals also who chose to file under bankruptcy like sole proprietorships and others. They file under this clause in order to safeguard their assets.
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