In order to benefit from the protections provided by Chapter 11 bankruptcy, one must file a petition with the appropriate bankruptcy court. This type of bankruptcy allows for the reorganization of debts, which can provide the petitioner with a way to halt collections efforts against an individual or organization. Most who file for Chapter 11 are business organizations, but individuals may be eligible for this option as well.
Maryland businesses often choose this option when unable to handle monthly expenses and pay off creditors in a timely manner. Even while under bankruptcy protection, the business will conduct business as usual, with day-to-day operations impacted very little. However, the business will report financial information and updates to the bankruptcy trustee for the entirety of the process.
Once the bankruptcy plan as been approved, reorganizing eligible outstanding debts, the business will likely not be required to pay off debts that were acquired before filing. For an individual who has been approved for Chapter 11 bankruptcy, this process can be long, but may help one effectively discharge overdue mortgage payments and credit card debt. Any individual or business under bankruptcy protection will be shielded from creditor harassment and collections efforts.
There are various chapters of bankruptcy available to the Maryland consumer or business. In order to understand which is the most appropriate for an individual situation, a complete case evaluation should be sought with an experienced bankruptcy attorney. With appropriate guidance, reorganization or the discharge of certain debts is possible, and a stronger financial future is attainable.
Source: www.uscourts.gov, “Chapter 11 – Bankruptcy Basics”, Accessed on Nov. 8, 2016