Legal Question in Bankruptcy in Texas

Chapter 11 is mainly for businesses that remain going concerns during the bankruptcy. An example would be GM or Chrysler. They still made cars during their bankruptcies. Chapter 7 is a liquidation bankruptcy. All the non exempt assets are sold and applied to pay the debts in order of priority.then the debtor is discharged. A chapter 13 is a consumer or wage-earner bankruptcy. The bankruptcy trustee and debtor agree to a payment plan. The debtor keeps the assets, makes payments on the plan and is discharged after the plan is paid off.

There are different reasons and strategies for utilizing the various chapters. I advise clients to file Chapter 7 (if they qualify) if they are struggling with too many credit cards and other unsecured debt. This type of bankruptcy does not require monthly payments. Chapter 13 is a reorganization for families or single persons. It requires monthly payments to creditors for a minimum of 3 years and a maximum of 5 years. As a result we recommend this type of bankruptcy for people who owe the IRS or people who are behind on their mortgage because it allows three to five years to catch up on these types of debts. Chapter 11 is a complex reorganization that is primarily designed for business entities. For example, American Airlines filed for Chapter 11 reorganization a few years ago. Feel free to visit out website for more information. www.northtexasdebtfreedom.com