In Chapter 7 bankruptcy, which is the most common form of bankruptcy, many debts are forgiven, and a variety of personal assets are sold — liquidated — to repay as many remaining debts as possible.
In general, Chapter 11 bankruptcy is utilized by corporations and other business owners, while Chapter 7 bankruptcy is favored by individuals.
More than anything, it prevents creditors from using abusive, last-minute tactics to try to make back as much of their money as possible.
Unlike Chapter 7, Chapter 11 does not liquidate assets, only restructures debts.This allows a debtor to protect an important asset, such as a business, from liquidation.In the case of sole proprietorships and similarly small businesses, Chapter 11 bankruptcy affects both business and personal assets. Trustee Program provides a list of government-approved credit counselors and debtor education courses.This meeting is not overseen by a bankruptcy judge, but by a bankruptcy trustee, a person who is in charge of managing an individual's bankruptcy. Most of the time, this meeting is very short unless the trustee or chief restructuring officer is confused or suspicious about certain information the debtor has provided.
One major difference in a Chapter 11 filing comes with the reorganization of businesses, which the trustee takes over during the bankruptcy process.
Even so, bankruptcy should be considered only as a last resort, as it has long-term, negative consequences on credit rating.