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Understanding debt relief and Chapter 11 bankruptcy

There are many types of bankruptcy that a person may consider when seeking relief from debt. One type that may be familiar to some people is Chapter 11, though if asked, few may know exactly what this form of bankruptcy entails. It may be beneficial for those facing difficult financial situations in Washington to have a basic understanding of this type of debt relief.

When a petition to seek Chapter 11 bankruptcy is filed, an automatic stay of all debt collections is put into effect. This allows those seeking debt relief the time to develop feasible repayment options without constantly worrying about collections and potentially mounting late fees. During this time, the bankruptcy court also supervises the individual's progress as he or she develops a repayment plan for his or her creditors. Those who have chosen this route are generally required to file monthly operating reports in order to keep the court apprised of their progress.

Filing for Chapter 11 versus other types of bankruptcy has a goal of ultimately returning the a person to financial solvency. This is often attained by the reorganization of debts and the negotiation of contracts and leases. This can allow debts to be partially repaid or discharged in some circumstances.

Determining whether or not to seek bankruptcy can be a difficult decision. Even after deciding to pursue this path, the decision of whether to file for Chapter 11 or another type of bankruptcy or debt relief can be confusing. An experienced Washington bankruptcy attorney can assist in evaluating the many options available. Based upon a person's unique financial position and goals, an attorney can discuss the various forms of debt relief and recommend options that can help his or her client along the road to financial solvency.

Source: FindLaw, "Chapter 11 Bankruptcy", Accessed on Nov. 9, 2016

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