Tennessee consumers who are in debt may be eligible to file for Chapter 11 bankruptcy. Despite popular belief, the Chapter 11 bankruptcy is not intended only for companies.
Individuals who are not able to qualify for Chapter 13 may be able to reorganize their debt under Chapter 11. They may revamp the debts they owe on investment properties, get current with their mortgage payments and pay a substantially reduced amount for the medical and credit card debts they may owe. However, there are distinct differences between Chapter 11 and Chapter 13 bankruptcies.
Unlike with Chapter 13, there is no cap to the amount of debt an individual can have under Chapter 11. The debtors are also not required to have income. Many of the debtors who file for Chapter 11 are able to sell assets to fund their Chapter 11 plan.
While the Chapter 13 process allows debtors to maintain their current financial accounts, most debtors who file for Chapter 11 are required to close all of the bank accounts they had and open a debtor-in-possession bank account. All income or any other funds the debtor receives must be funneled through the DIP account. Chapter 11 bankruptcy also requires all individual debtors to file monthly reports noting their expenses and income, while Chapter 13 applies this requirement only to debtors who are operating a business.A bankruptcy attorney may advise individuals who have substantial debts about their legal options. The attorney may examine a client’s financial situation and determine what chapter, if any, would be the most suitable.