Chapter 11 allows individuals and businesses to liquidate or reorganize their debts. Chapter 11 is different from Chapter 7 or Chapter 13 bankruptcy cases. Chapter 11 usually involves higher amounts of money about the assets and liabilities of the individual and business.
Both individuals and businesses can use Chapter 11 to resolve their debts. You can organize the debts in your name as an individual debtor to help you restructure your finances, protect your assets, and pay off your creditors. You can still organize the debt if you file as a company, but only for the business debts.
Individuals rarely file Chapter 11 cases. Individuals rarely file Chapter 11 cases. However, they do so for either real estate investment reorganization (or reorganization of unsecured debts which are too high to be eligible for Chapter 13 relief).
Chapter 11 is an effective tool for real estate investors that allows them to rewrite mortgages. Chapter 11 allows you to reduce principal balances to the property’s value. This would lower the mortgage to $100,000 from $50,000.
Chapter 11 allows you to reduce your interest rate and extend your term of repayment. Chapter 11 is often used to extend the term up to 360 months (30 years). This allows you to pay less monthly and makes the property more profitable.
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