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Phoenix Arizona Individual Chapter 11 Bankruptcy: Why?
In the 2005 BACPA amendment to the bankruptcy code, there were some changes that made a Phoenix Arizona Individual Chapter 11 Bankruptcy a better choice in certain situations.
What follows is a list of issues that make Phoenix Arizona Individual Chapter 11 Bankruptcy a good option in addressing debts.
Phoenix Arizona Individual Chapter 11 Bankruptcy: Cram Down of Property including Rental Homes and Vehicles
In a Chapter 11, you can reduce the debt on property to fair market value. This is important because if you have reduced debt, you may be able to stay in business if your debts were reduced. This is the main benefit of filing bankruptcy if you want to keep your assets that have more debt than value.
Additionally, a Chapter 13 bankruptcy rules changed how attorneys could alter vehicle debt. If you file Chapter 13 and have owned your car for less than 910 days, then you will have to pay the full amount of the debt at the time of filing bankruptcy (with limited exceptions). In a Phoenix Arizona Individual Chapter 11 Bankruptcy, there is no restrictions on cramming down the vehicle debt to the value of the vehicle. If your car is worth $10,000 – you will pay $10,000 – no matter how much you owed prior to bankruptcy.
Phoenix Arizona Individual Chapter 11 Bankruptcy: Absolute Priority Rule
Additionally, in a 2012 9th Circuit BAP opinion, it was determined that Individual Chapter 11 Debtors are excepted, or in other words, do not have to comply with the Absolute Priority Rule. In Re Friedman 466 B.R. 471 (2012). The Absolute Priority Rule states that a Debtor must pay its creditors in full if it intends to keep property. 11 USC 1129(b)(2)(B)(ii). This is a big deal.
This was not a 9th Circuit nor United States Supreme Court Opinion. That means this may change in the future. For now, this is a win for Individual Chapter 11 Debtors.
Phoenix Arizona Individual Chapter 11 Bankruptcy: Debt Limits
If you exceed debt limits of a Chapter 13, Chapter 11 may be your only option. Though the number adjusts over time, according to the bankruptcy law, you cannot file a Chapter 13 if you have more than $360,475 in unsecured debts and more than $1,081,400 in secured debts. 11 U.S.C. § 109(e). Click here to see if the debt limits changed.
If this is your situation, then Chapter 11 may be best option in addressing your Arizona debts.
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I look foward to assisting your family and/or business through the process. Call for a free consultation: 480-464-4667.