So a common question we get is which bankruptcy is reorganization? When we talk about reorganization at our firm we usually are talking about personal restructuring of debt.  Although there is a business reorganization, Chapter 11, in this article we will focus on personal debt restructuring under Chapter 13 of the bankruptcy code..

So Chapter 13 bankruptcy is a bankruptcy  reserved for individuals. If you have a small business set up as a sole proprietorships you can use this type of bankruptcy since sole proprietorships are homogenous to their owners. In Chapter 13 you file a repayment plan with the bankruptcy court detailing how you are going to repay your debts. Once approved you need to follow through with the plan or risk having the bankruptcy dismissed.

Also important to understand the amount you must repay depends on how much you earn, how much you owe, and how much property you own. So the amount that is paid back in each case varies in each case.  Some clients pay back pennies on the dollar and others end up paying back their entire debt.  As you work with an experienced bankruptcy attorney they will be able to help determine that amount you will pay back. Sometimes filing Chapter 7 is a better option with less risk.

One of the great benefits of this kind of bankruptcy is reorganization that can help you avoid losing your home to a foreclosure if you are behind on your mortgage payments.  You can use Chapter 13 to come up with an affordable repayment plan to keep your home, even if your lender is unwilling to work with you.  If you are facing a foreclosure contact us today and learn all of your options to save your home.

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