As the average amount of debt that people have accumulated continues to rise, exceedingly more people have found themselves in situations where they are backed into a corner and must find a way out. One common way to get out of these financial pitfalls is to file for bankruptcy.
Just in 2013, there were an estimated 1,071,932 bankruptcy filings of all sorts in the United States. The different types of bankruptcy can help a variety of parties.
Chapter 7 bankruptcy, for example, is most commonly used by individuals looking to liquidate their assets in order to pay off creditors. One of the most common causes of Chapter 7 bankruptcy filing in recent years is healthcare. There were over two million people who filed for bankruptcy due to unpaid medicals bills in 2013.
Out of the enormous amount of filings, about 8,980 were chapter 11 bankruptcies. While this can used by individuals, between chapter 7 and 11, chapter 11 is mainly used by corporations. Chapter 11 filings allow an organization to propose a plan of reorganization of business affairs and assets to creditors which lays out regular payments that allow the company time to restructure while over time erasing their debt.
Because there is so much at stake with an entire company riding on debt payments, chapter 11 filings are the most complex, usually requiring assistance from a chapter 11 bankruptcy attorney. These filings also happen to be the most expensive. In order to avoid unnecessarily paying substantial amounts of money to creditors, carefully analyzing other options should also be a priority that a chapter 11 bankruptcy attorney can help explore.
Finding yourself in a tight financial spot can easily happen to anyone. Especially for corporations, there is a lot of potential for unforeseen circumstances and expenses. Working with a chapter 11 bankruptcy attorney can help make sure you’re taking the right plan of action.