Chapter 11 bankruptcy is typically called a reorganization bankruptcy and it may be filed either by the debtor or by their creditors. Individuals involved in Chapter 11 bankruptcy may or may not need to file individual bankruptcies either as Chapter 7 or Chapter 13. As with all other types of bankruptcy, filing for bankruptcy under Chapter 11 puts the automatic stay into effect, stopping any collection efforts in lawsuits. During Chapter 11 you are called a debtor in possession, even if you are an individual, meaning that you remain in control of bankruptcy estate instead of the US Trustee.

Individuals may choose to file for Chapter 11 bankruptcy if they have income greater than allowed by the Chapter 7 means test, and debt in excess of that allowed by Chapter 13. You’re also allowed to keep assets beyond the exemptions that you would claim under Chapter 11 and Chapter 13, which is one of the key attractions of this type of bankruptcy, despite its expense.

WHAT IS TENANCY BY THE ENTIRETY?

One of these protected asset classes is called tenancy by the entirety, and this is where real or personal property is held by spouses together as a single legal entity with each spouse owning the whole property.  Under this concept the debts of an individual spouse may not attach to property that is held in tenancy by the entirety. This type of joint tenancy can only be dissolved by divorce, joint creditors or death. The Florida Bar holds that tenancy by the entirety can be claimed for such assets as checking accounts, promissory notes, and other items. Other protected classes of assets are defined by Florida law, such as life insurance policies, wages, annuities, disability income, pensions, homesteads, medical savings accounts, and other property, including the “wild card” $4,000 exemption.

You will remain the debtor in possession until your reorganization plan is confirmed, your case is dismissed, or your case is converted to a Chapter 7 bankruptcy. During this time you have the right to use, sell, or lease property of the bankruptcy estate, and may hire professionals to assist you in the administration of the estate. It is only in very rare circumstances a bankruptcy trustee can be appointed to oversee the bankruptcy estate in a Chapter 11 bankruptcy, but those circumstances are not very favorable. It means the court has decided that you have mismanaged the estate, are incompetent or dishonest, or have committed fraud. Believe me, you do not want the court to decide to give you a trustee.

In order to get the full scope of Florida exemptions for Chapter 11 bankruptcy, I would urge you to make an appointment and come into the office for a consultation. A consultation is free, and bankruptcy – especially one as complex as Chapter 11, is not something you want to tackle yourself, or without the assistance of a bankruptcy preparer. You do need a lawyer on a matter this complex, and Van Horn law Group is the place to find one.