Many Chapter 13 Bankruptcies Fail
And that's due in large part to the fact that Chapter 7 cases are much simpler and quicker. The main reason so many Chapter 13 cases fail is that it's difficult to stick to the required 3–5-year repayment plan. Most payment plans under Chapter 13 are five years long.
Some Loss of Control Over Business Operations
This generally means that activities like selling, purchasing, refinancing, or leasing major capital assets require court approval.
Not all debts are discharged. The debts discharged vary under each chapter of the Bankruptcy Code. Section 523(a) of the Code specifically excepts various categories of debts from the discharge granted to individual debtors. Therefore, the debtor must still repay those debts after bankruptcy.
Only about 10% of Chapter 11 filings result in success; far more often, they end up in Chapter 7 straight bankruptcy, in which the company closes and its assets are sold to pay back secured creditors.
The more nonexempt property you keep will increase the amount you owe in your repayment plan, but you will likely get to keep your house.
It is sometimes called a “reorganization” bankruptcy, because it allows companies to restructure their organization while continuing business. Under a Chapter 11 bankruptcy, you are protected from lawsuits, and you may keep all of your assets.
Some eligible debts may even be eliminated. The company reputation takes a hit: Bankruptcy records are publicly available, so the filing robs your business of some of its privacy and can also result in a loss of public trust or a negative reputation.
An individual cannot file under chapter 13 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy ...
The filer doesn't have to meet any debt limits under Chapter 11 rules and there are no limits to file. Chapter 13, on the other hand, is generally used by those with a stable source of income. Unlike Chapter 11, there are debt limits that filers must meet debt limits to qualify.
Get Your Filing Fee (or Apply for a Fee Waiver)
If you don't qualify for the fee waiver and can't afford to pay the $338 filing fee, you have another option: You can apply to the court to pay your filing fee in four installments within 120 days of filing bankruptcy.
U.S. Trustee fees: Chapter 11 cases require payment of quarterly fees to the U.S. Trustee's office, which can be significant for larger cases. Administrative expenses: In Chapter 11 bankruptcy, the debtor must pay ongoing administrative expenses such as rent, utilities, and employee salaries.
In addition, Chapter 11 may be denied if the business fails to get credit counseling 180 days before filing. The court considers credit counseling to be an essential step in the process of filing for bankruptcy.
THE BENEFIT OF CHAPTER 13
The court may discharge the remaining amount you aren't able to pay over the years. Another benefit of Chapter 13 is that you may keep your important assets, like your home or car. You don't have to give up everything to pay your debts and move forward in a better financial position.
Incomplete or Inaccurate Documentation: Filing for Chapter 13 bankruptcy requires comprehensive documentation, including income records, tax returns, and a complete list of debts and assets. Failure to provide accurate or complete information may result in disqualification or case dismissal.
A Chapter 13 petition for bankruptcy will likely necessitate a $500 to $600 monthly payment, especially for debtors paying at least one automobile through the payment plan. However, since the bankruptcy court will consider a large number of factors, this estimate could vary greatly.
Trustees typically examine your financial transactions over the past two years. This review includes bank statements, credit card transactions, income records, and major financial activities.
There is no age limit. However, it makes sense if you are not going to be someone who can incur debt or credit unless you are an adult.
No cramdown in a dismissed Chapter 13 case.
You'll benefit from the reduced balance and interest rate only if you complete your Chapter 13 plan. If the case gets dismissed, the loan will revert to its original terms and the creditor will have the right to collect the total amount owed at the higher interest rate.
In California, the filer of bankruptcies in California is responsible for all associated costs, including: Court fees. Trustee fees. Attorney fees.
You no longer have full control over your company. Court approvals are needed for business operations such as refinancing, vendor agreements, and business expansion. And, just to get a court to agree to a Chapter 11 petition, you have to prove that the company can be profitable under a Chapter 11 reorganization.
Secured creditors like banks are going to get paid first. This is because their credit is secured by assets—typically ones that your business controls. Your plan and the courts may consider how integral the assets are that secure your loans to determine which secured creditors get paid first though.
The California statute of limitations for filing a judgment is ten years. If the debtor cannot pay or complete payment within this time, you must renew the judgment. The judgment must continue to be renewed to ensure the debtor pays the full amount.
If you're unable to pay your filing fees, the court will usually try to work with you. For Chapter 13 bankruptcy, you may be able to roll your court fees into your repayment plan, paying the court in monthly installments.