New Jersey Chapter 11 Bankruptcy for High Net Worth Individuals
If you are struggling with your debt load, New Jersey Chapter 11 bankruptcy for high net worth individuals could be your best option. With the help of an experienced bankruptcy lawyer, you could make a positive arrangement with creditors and get your financial situation in order. Call a skilled attorney today to discuss your situation.
Difference Between Bankruptcy for Businesses and Individuals
The process for filing Chapter 11 bankruptcy for a business is similar for a high net worth individual, but there are some different forms that are warranted. An individual is not going to have a business ledger banking with a profit and loss statement, but for the most part, the process of filing is largely the same.
Where there is a difference is in the nature of the business. In addition to profit and loss statements, there are multiple business accounts and the nature of the creditors. An individual is not going to have a lot of vendors compared to a business. Every case is different, but the main differences are usually the number of creditors, the nature of the business, profit and loss statements, and banking allocations.
How Chapter 11 Bankruptcy Can Help Individuals
Filing for a Chapter 11 bankruptcy could help a high net worth individual or family in debt survive because there are various rights and remedies whereby they could shave off a portion of the principle of an underlying asset. It could allow them to shed unwanted or unneeded debt load.
For example, some people have a vacation home or a boat that they make payments on, and if they do not pay those payments there is going to be a foreclosure or seizure of those assets. The bankruptcy allows them to restructure by shaving off the underlying principle, if the circumstances are correct, or by surrendering those assets in the bankruptcy. It is a global solution to the issue.
One could look at all of those things to get an idea of exactly what is going to happen at the end goal. They have a better idea of what exactly is going to happen in a pre-packaged Chapter 11. A pre-packaged Chapter 11 is when they negotiate everything in advance and file with all of the primary issues already negotiated and ready to be handed to the court for the court to review and presumably approve.
How Bankruptcy Affects Family Members
If a high net worth individual is filing for Chapter 11 bankruptcy, spouses and family members may potentially be affected. Family law is outside of the purview of bankruptcy courts, so any obligation one has in state court, whether it is alimony or child support, for the most part, survives in bankruptcy. However, there are some exceptions.
One exception is equitable distribution. For example, if one has a primary house and two vacation homes it is possible for them to be ordered to give one of those homes in state court and discharge that obligation to do so in bankruptcy court because they are able to discharge their debt of equitable distribution. But spousal support, mainly alimony or child support, may not be discharged in bankruptcy.
What to Expect Before Filing Chapter 11 Bankruptcy
A high net worth individual undergoing Chapter 11 bankruptcy should expect to negotiate in good faith with their creditors. Most people would be surprised and shocked at the extreme level of litigiousness that could be encompassed in a Chapter 11 bankruptcy. Most people are not prepared for that, so on the attorney’s end, there needs to be a managing of expectations for the individual. They need to prepare them well in advance to expect a high level of negotiations. Negotiations are always ongoing, even after they are settled because one side could decide to pull out and employ other rights or remedies if they want. When they have an agreement and something is set in a court order, they could have a high level of trust that that is going to be followed.
How an Attorney Could Help
A high net worth individual should work with an attorney when filing for Chapter 11 bankruptcy in New Jersey because it is an extraordinarily complicated area of the law. There are two skillsets that one is employing with the attorney. One is navigating that legal landscape, and the other is being able to negotiate with the creditors in a way that gets them relief.
An experienced attorney could help with both the negotiations and legal issue surrounding New Jersey Chapter 11 bankruptcy for high net worth individuals. For sound advice on your case, reach out to an attorney today.