There are a lot of differences; far too many to list in this space. Chapter 11 is a reorganization of debts that requires some kind of repayment plan that gets voted on by the creditors. It is extremely involved, expensive and would be very unlikely for someone who is aged 85. Chapter 7 is a straight liquidation of non-exempt assets.
Exemptions are "protections" for value you have in certain assets such that they are "exempt" from collections. Every state has different exemptions amounts available. Exemption laws are based on the state where you resided for the 2 years prior to filing your bankruptcy case or, if you lived in more than 1 state during that period, in the state where you resided for the greater part of the 180 days prior to that 2 year period.
Is there some reason your grandfather doesn't believe he would qualify for Chapter 13? Does he have too much debt to qualify?
Legal disclaimer: Mark J. Markus practices law in California only. The information is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. Answering this question does not in any way constitute legal representation.
Unless you grandfather has over $360,000 in unsecured debt that he wants to pay back, or more than a Million in secured debt he is behind on, chapter 11 would make no sense. If he has less debt he should probably do a chapter 7. Once he consults with an attorney, it will be clear which one he should do.
I ask for a $30,000 retainer to even begin work on a chapter 11 case, and fees for legal and accounting help continue at a high pace throughout the case because it is so much work. Is he a wealthy man? If he's an ordinary guy who lives on social security, he should be looking at chapter 7. A Texas bankruptcy attorney can help him understand how that would work out.
Frequently people are confused about chapter 11, just having read a few things here or there. Probably he is trying to decide between 7 or 13. 13 is a monthly payment plan to pay what you can afford over a 3 to 5 year period. It is often used by people to save their house from foreclosure or their car from reposession. 7 is used by folks with too much credit card debt, medical bills, or other unsecured debts. 7 is usually over in just a few months. Sometimes people make too much money for 7 and have to file 13 instead, but I rarely see that situation with a retiree. Most attorneys offer a free consultation for bankruptcy and a good attorney will go over all the options with your grandfather.
I am licensed only in Texas. Offering information of a general nature in response to a question is not intended to be legal advice in your state.
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