Hume Law Firm

Creditoribus Mortem

Bankruptcy Attorney in Albuquerque, Santa Fe & for all of north-central New Mexico .  Chapter 7 & Chapter 11.  Mortgage foreclosure defense.

Chapter 11

Both Chapter 11 and Chapter 13 are known as reorganizational bankruptcy. Less than 10% of bankruptcies filed in New Mexico are Chapters 11 or 13. Historically, Chapter 11 is reorganizational bankruptcy for businesses and Chapter 13 is reorganizational bankruptcy for people.  Chapters 11 and 13 have some similarities but they have very distinct qualities and each offer unique paths. Since the bankruptcy law changes in 2005, there has been a noted increase in persons filing Chapter 11 bankruptcy. Both Chapter 11 and Chapter 13 require repayment of all or part of the debts owed and the debtor may or may not be able to keep all or some of the pre-petition assets. The distinctions between Chapter 11 bankruptcy and Chapter 13 bankruptcy are significant and should be discussed with your lawyer. I do not practice Chapter 13 bankruptcy - I prefer reorganization under Chapter 11

For a person considering re-organizational bankruptcy, you must usually have more regular monthly income than regular monthly expenses. Reorganization under Chapter 11 for a person requires the same preliminary steps as in a Chapter 7 bankruptcy. You should meet with an attorney to discuss whether you are a candidate for Chapter 11 reorganization. You'll have to take the pre-petition counseling class, provide proof of income for the previous six months, and bring copies of your federal tax returns for the previous two years. The requirements for a business filing Chapter 11 are similar to those for a person filing Chapter 11 with some exceptions such as for the pre-petition counseling class.

Unlike Chapter 7 bankruptcy, the Bankruptcy Court appoints the United States Trustee to oversee Chapter 11 cases. The US Trustee requires submission of information and documents within fifteen days of filing the Chapter 11. Very soon thereafter, an initial debtor interview is conducted at the offices of the US Trustee. A Meeting of Creditors is held a couple of weeks later. The US Trustee closely monitors the performance of the Chapter 11 debtor in possession and compliance by the debtor in possession.

A Chapter 11 plan of reorganization must be prepared, submitted to creditors, and approved by a committee of your creditors.  Not all creditors must approve the plan and my experience is that most creditors do not vote to either approve or disapprove the plan. Not all creditors will be paid under the plan of reorganization. The Bankruptcy Court and the US Trustee will oversee the plan to ensure the plan treats all creditors fairly.  The requirements of an approved Chapter 11 plan may be completed significantly quicker than a Chapter 13 plan, months instead of years. Also, in Chapter 11, you propose what you want to pay to your creditors - as long as the amount is feasible and fair, there is a reasonable expectation your plan of reorganization will be approved by the Court. In Chapter 11, you are in control of the disbursements to your creditors.

My goal for your Chapter 11 is to ensure you are able to make comfortable payments to your creditors and provide you with a fresh start. If situations change i.e. loss of income, a reorganizational bankruptcy may be dismissed or converted to Chapter 7.