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An ex-quarterback for the Jacksonville Jaguars, Mark Brunell, had filed for a Chapter 11 bankruptcy, in which the debtor includes all of his creditors and proposes a plan to repay them all. Then, the approval of the plan lies in the hands of the creditors in case of the infringement of their rights. The approval of all the infringed creditors leads to the confirmation of the plan. Mr. Brunell’s plan was also confirmed by the Judge, Jerry A. Funk.
Consumer debtors, who do not pass the Means Test, are ineligible to file for a Chapter 7 bankruptcy, which often leads to the filing of a Chapter 13 bankruptcy by them. However, there is a ‘debt ceiling’ in Chapter 13, which limits the ownership of dollar amount of the debtors. The current debt ceiling for unsecured debts is $360,475 and for secured debts is $1,081,400. If the debtor earns more than the median income and also has debts more than the debt ceiling, his or her only option might be a Chapter 11 case, as it was in Brunell’s case.
In Chapter 11, creditors must either be able to retain their already existing rights in the proposed plan or they should agree to get modifications by the plan in those rights. If not that, they should at least get an amount equal to what they would have got in case of Chapter 7 liquidation. Since Mark Brunell owned assets worth $350,000 (not exempted and thus subject to liquidation in Chapter 7), his plan was required to have an inclusion of a proposal to pay $350,000 to his unsecured debtors.
In Chapter 11 also the debts will be considered discharged only after the payment of all the proposed payments in the plan.
In order to know more about the different types of bankruptcies and get professional guidance on them, contact the Recovery Law Group, best in Los Angeles & Dallas, TX, at Recovery Law Group or on 888-297-6203.