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Texas Bankruptcy - Chapter 11
A Texas bankruptcy filed under chapter 11 laws is
frequently referred to as "reorganization". Chapter 11
is more complex than other chapters and offers a wider range of options. Ch. 13 also provides reorganization but
is restricted to allow only individual filers, subject to limits on total debts, income, and plan terms. A
Texas bankruptcy under Ch. 13 is sometimes referred to as a wage earner plan.
A chapter 11 case begins with the filing of a petition. The petition may be a
voluntarily filed by the debtor or filed by creditors. The code provides specific
conditions which limit involuntary petitions filed by creditors. The standard petition form identifies the debtor by a variety of personal
information all of which are subject to cross referencing and verification and must describe the proposed plan of reorganization. Voluntary
petitions may elect qualification as a small business as provided by 11
U.S.C. 101(51)(C) or 11 U.S.C. 1121(e). Small business classification permits streamlined administration, by
combining administrative hearings and allowing alteration of statutory deadlines and waiting periods.
Texas Bankruptcy
Once filed, the petitioner automatically becomes a debtor-in-possession as
described in 11 U.S.C. 1101. As a term of legal art, this
term is defined by statute and includes a wide assortment of
responsibilities and privileges.
In chapter 11 filings, the debtor retains possession of assets. The debtor also is empowered to dispose assets
until the plan of reorganization is confirmed, dismissed, converted
to Ch. 7, or preempted by appointment of a trustee by court order. While a Texas bankruptcy case under chapter
11 is pending, a debtor-in-possession is authorized to continue business operations, pay debts, pay expenses,
and limit or suspend payments to special defined classes of creditors.
Normally a trustee is not appointed in chapter 11 Texas bankruptcy. A debtor-in-possession continues operation
of the business and/or personal affairs while assuming many roles traditionally performed
by a trustee in consumer cases. 11 U.S.C. 1107(a). The debtor-in-possession prepares the plan, responds to creditor motions and is
liable (including criminal liability) for compliance with applicable laws. In almost all Texas bankruptcy cases
filed under chapter 11, debtors are represented by an attorney. anyone who files a Texas bankruptcy case under
chapter 11 potentially receives the greatest range of options, which in turn, requires time intensive legal
expertise to receive these benefits.
For best results, debtors must carefully plan the selection of chapter, date of filing, and options. All options are not available to all debtors because of variation in financial histories, assets owned, and new income restrictions. Because of the complex nature of recent changes in federal law, the assistance of a qualified attorney or law firm is essential. With assistance, effective debt relief is readily available through the bankruptcy courts.
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