Differences Between Chapter 11 and Chapter 13 Bankruptcy
Chapter 13 and Chapter 11 bankruptcy have certain key similarities that can cause confusion for anyone who doesn’t specialize in bankruptcy.
Who Can File for Chapter 11 and Chapter 13 Bankruptcy?
Chapter 11 bankruptcy is available for businesses and individuals with a very large amount of debts and income. Filings are available for almost all individuals as well as sole proprietorships; however there are debt/income limits for eligibility. These limits change each year.
Chapter 11 Bankruptcy- Creditors Vote
In both Chapter 11 and Chapter 13 bankruptcy, the debtor and the debtor’s lawyer or law firm create a plan to reorganize and consolidate the debt. In Chapter 13 bankruptcy, the creditors accept the plan assuming it meets
certain legal standards. In Chapter 11 Bankruptcy, the creditors vote to determine whether they will pass or reject the plan.
Under Chapter 11, if the creditors turn down the plan, the debtor can come up with a new plan. The judge may force the creditors to accept the debtor’s plan or the negotiations may simply fail. If negotiations fail, the business will either have to file for business Chapter 7 bankruptcy, or, the case may be dismissed.
To learn more about bankruptcy in the Austin, Georgetown, Leander, or Round Rock area, you can schedule an appointment for a free initial consultation with one of the members of our legal team. Just call 512-322-5367 or
contact our offices online.