Whether bankruptcy is entered voluntarily or involuntarily the major difference between Chapter 7 and Chapter 11 is:

Question

Quizplus · Accepted Answer

The major difference between Chapter 7 and Chapter 11 bankruptcy is that liquidation occurs in Chapter 7, but reorganization is the objective under Chapter 11. This means that in Chapter 7, the debtor's assets are sold, and the proceeds are used to pay off creditors, while in Chapter 11, the debtor is given the opportunity to reorganize their finances and come up with a plan to pay off their debts over time. Therefore, option C is the correct answer. Option A is incorrect because liquidation occurs in Chapter 7, not Chapter 11. Option B is incorrect because there is a priority of claims in Chapter 11. Option D is incorrect because lawyers' fees are necessary in both Chapter 7 and Chapter 11 bankruptcy cases.

Whether Bankruptcy Is Entered Voluntarily or Involuntarily the Major Difference