Before any business or individual considers filing for chapter 11 bankruptcy, they must take a moment to evaluate the total costs for filing for chapter 11 bankruptcy. One thing to note is that chapter 11 bankruptcy is very expensive. In fact, it is so expensive that it is usually not even an option for most individuals and is sometimes not even a good option for some small businesses. Nevertheless it is an option, and there are situations where this option is worth the expense and an attorney for chapter 11 in Lancaster County PA can help in making this decision.
Parts to Chapter 11 Bankruptcy
There are two different parts to a chapter 11 bankruptcy filing which contribute to its high costs. The first part is the reorganization plan. This is basically a plan on how the business or individual will reduce their overall costs by either selling off assets or reducing overhead. For individuals, this might mean selling off properties that have a loan on them to reduce the overall total monthly expenses.
The second part of a chapter 11 bankruptcy is called the debt repayment plan. Once a chapter 11 bankruptcy is filed, all debt collections are frozen until an agreement is reached. That means there is no additional interest and no additional late fees. The plan will outline how a business or individual will make payments through the restructuring to eventually pay off the entire debt that is currently owed.
Time Costs Money
In addition to the two different parts of chapter 11, there is also the added time needed to through the hearing as well as meeting with all of the creditors. On top of that there is a negotiation process for those filing for chapter 11. A business or person has to submit their proposal for paying back the debt. The creditor can accept or reject the offer. If they reject the offer, then a business or individual has to go through the whole process over again.
A chapter 11 bankruptcy takes more time, which means more costs. On average, it costs over $1,000 in fees to go through chapter 11 bankruptcy. That does not even include the fees from a lawyer for chapter 11 in Lancaster County PA either, which it is highly suggested that a business or individual have one to go through the process.
There are some businesses or individuals that try to avoid any additional costs by electing not to hire an attorney. This is actually a bad idea. The process of bankruptcy is complicated enough, but the process of chapter 11 bankruptcy is even more complicated, especially given that there is a bit of negotiation skills that are needed for this type of bankruptcy.
Mitchell A. Sommers ESQ, P.C. is a lawyer for chapter 11 in Lancaster County, PA that offers legal services in Lancaster, Ephrata, and the surrounding regions in Pennsylvania. The legal services offered include bankruptcy law for both businesses and individuals as well as family law, criminal law, real estate law, estate law and wills.