Can Individuals File for Chapter 11?

Chapter 11 Bankruptcy Is Not Just for Businesses

Chapter 7 eligibility requirements have become increasingly harder to meet, which means that more and more people are turning to Chapter 11 to help them get relief from overwhelming debt. At Atlas Consumer Law, our Chicago bankruptcy lawyers can help you determine whether this type of bankruptcy will provide the relief you need. If you are a high-income earner with significant debts, you owe it to yourself to explore the path to a debt-free future.

Contact Atlas Consumer Law online or call us at (312) 313-1613 to find out how we can assist you.

What Chapter 11 Bankruptcy Looks Like for Individuals

Long associated with businesses, Chapter 11 bankruptcy is an increasingly popular choice for individuals. Chapter 11 differs from Chapter 7 and Chapter 13 in a number of ways. For example, you will not be required to attend a credit counseling class if you file for this protection. Also, your debt will not be discharged when creditors approve a payment plan, and you must commit future income or assets to your creditors for the length of your bankruptcy plan.

Chapter 11 filings tend to be more expensive and onerous than a Chapter 7 or Chapter 13 filing, and are, therefore, not the right choice for everyone. However, if you own significant assets or earn a significant income coupled with a high amount of debt, this form of financial relief can help address your needs. Our Chicago bankruptcy attorneys at Atlas Consumer Law will work closely with you to help you explore all of your debt relief options.

Using "Cram Downs" to Help with Underwater Homes

The "cram down" provisions of a Chapter 11 bankruptcy filing can be particularly useful for people whose homes are underwater. Cramming down allows the mortgage to be rewritten so that the principal is reduced to what the property is currently worth, rather than what is actually owed.

A typical Chapter 11 case looks something like this:

  • Brad purchased a property with a $325,000 mortgage a few years ago. Due to economic turmoil, this property is now worth $150,000. Through Chapter 11, Brad can cram down his principal payments to $150,000.

Chapter 13 bankruptcy has a similar cram down provision. However, the reamortized loan must be paid off at the end of the payment plan, which lasts for three to five years. Chapter 11 allows these loans to be paid off over a period of 20 to 30 years, giving individuals time to get their finances in order and allowing them to remain in their homes.

Contact Our Chapter 11 Bankruptcy Attorneys in Chicago

While Chapter 11 is typically associated with struggling businesses, anyone can apply for this form of relief. However, this type of bankruptcy protection might not be the best option for everyone. It can be a viable form of debt relief for high-income individuals with significant assets and significant debts. At Atlas Consumer Law, our team will thoroughly review your financial situation to determine whether this type of filing can best benefit you.

If you are overwhelmed by debt, contact Atlas Consumer Law to schedule an initial consultation.

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