Chapter 11 v Chapter 13 - Part 6 - The Showdown

The details of our outlay in a Chapter 13 are detailed here.  The estimated gross cost of Chapter 13 is $55,400.

We didn't break down our Chapter 11 outlay yet, but it looks something like this -

Admins -  $15,000
Filing Fee - $1,213
UST Fees for a year -  $2700
Unsecured Creditors -  24 *250 =  $6,000
Uncle Joe if needed -  $10,000 -  this assumes Joe has to kickback his new value to Uncle Joe at some later date.

The tally -  Chapter 13:  $55,400 ;  Chapter 11: $34,913

Money isn't the only consideration.  In a Chapter 13, Joe has to pay via certified funds, which is a cost.  In a Chapter 11, Joe has to complete monthly operating reports, which is some work.  The Chapter 13 discharge is broader than a Chapter 11 discharge.  The Chapter 11 discharge will be entered sooner.  There is no real way to modify a Chapter 11 post-confirmation, the Debtor is in it for the long haul, while in a 13 the Debtor has some modification flexibility.

However, at the end of the day, Joe would be a fool to file a 13 here.  He has far more flexibility in constructing his plan and he saves money.  He gets his discharge faster.  He has control of his plan, not the trustee.  His attorney gets paid more.

The only thing stopping Joe from filing Chapter 11 is fear of the term Chapter 11.  For whatever reason, a lot of debtor's counsel think Chapter 11 is too hard.  Don't sell yourself short.  One of my philosophies on life is don't worry about what you can't do, focus on what you can do, and a large majority of my fellow Debtor's counsel colleagues can do this, I know that for a fact.

I know it is a fact because I figured it out by asking a few veterans some questions, using westlaw, and stealing pleadings off pacer.  Nobody showed me how to do it, I just figured it out.  The good news is anyone who bothers to read this blog is smart enough to figure it out too.  I'll be happy to give you my insight, thoughts, and of course some unsolicited opinions about things you certainly don't care about.  You have to take the good with the bad. ... and there is more good in Chapter 11 than bad.