Reorganize vs Liquidate
Bankruptcy terms got you down? If you are trying to understand the difference between reorganize vs. liquidate you have come to the right place.
All those chapters in the bankruptcy book can easily give you a headache within a matter of moments. While the entire process can sound confusing it is really quite simple to understand once it has all been explained. There are five different types of bankruptcy ranging from Chapter 7 to Chapter 13 (7, 9, 11, 12, and 13). Each chapter is named after the bankruptcy code book, which happens to include all the rules regarding each type of bankruptcy. Those five chapters are then separated into two kinds of cases: reorganize vs. liquidate.
Straight (or liquidation) bankruptcy only applies to Chapter 7. Reorganization applies to Chapters 9, 11, 12 and 13. So, which Chapter do you fall under? Well, that depends… Chapter 7 can be applied to a person, company, or corporation. Those that file Chapter 7 may keep some of their assets, which is why this Chapter is usually reserved for individuals that cannot pay off their debts. Chapter 9 applies to large municipalities. Chapter 11 is a type of reorganization that only applies to corporations or those individuals with debts totaling more than $336,900 in unsecured debts and more than $1,010,650 in secured debts. Chapter 12 is a type of reorganization reserved strictly for farmers. Chapter 13 is a type of reorganization plan for individuals that have less than $336,900 in unsecured debts and less than $1,010,650 in secured debts.
Basically, the main difference between reorganize vs. liquidate has to do with the type of debt that you have. If you are going to file under Chapter 7 you must liquidate. If you are going to file under any other chapter you will be dealing with reorganization. Which one will work best with the type of situation that you are in? The only person that can really answer this question is a qualified attorney. A hired bankruptcy lawyer will be able to steer you in the right direction regarding you debts.
The information within this article might be helpful, but it is not meant to guide you towards making a filing decision. Everything that you own along with all of your debts must be carefully calculated and weighed in order to determine the right course of action. The only way to make sure that you are making the right decision is to hire a bankruptcy lawyer.
While the reorganize vs. liquidate decision might seem straightforward enough, bankruptcy can get rather complicated. Hiring a bankruptcy lawyer will ensure that your filing will benefit your life.