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Thursday, July 15, 2010

Chapter 11 Bankruptcy Discharge

Chapter 11 Bankruptcy Discharge

The general goal of a Chapter 11 case is to reorganize the debtor’s financial condition and repay debts over time.  Often the debts are paid at a discount or partially discharged by the bankruptcy.  The effect and scope of the discharge depends on a number of factors, including whether the debtor is a corporation or an individual.
Unlike a Chapter 13 case which limits the bankruptcy reorganization and discharge to individuals, a Chapter 11 discharge is available to both businesses and individuals with a significant amount of debt and/or secured creditors.  The Bankruptcy Code provides that confirmation of a Chapter 11 plan of reorganization generally discharges the debtor from any debt that arose before the date of confirmation.  However, the discharge is not available to individual debtors until all payments required by the plan have been made (like in a Chapter 13 case).  Typically the repayment period in a Chapter 11 bankruptcy is  up to 5 years.
Individuals who seek a Chapter 11 discharge will be limited to the same exclusions from discharge as in a Chapter 7 case.  These exclusions include taxes owed by an individual or customs duties, certain spousal or child support obligations, fines, penalties, or forfeitures to a governmental unit.  If the Chapter 11 results in the liquidation of a company’s assets, the company will cease to exist at the conclusion of the case.
If you or your business is in a difficult financial situation and need professional help, call the BK Law Group PC at (508) 499-3366 and discuss your situation with an experienced bankruptcy attorney.  Chapter 11 bankruptcy is one tool in the arsenal of the bankruptcy practitioner, but there are many options to solving complex debt issues.  Call today for a free consultation.

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