Business Bankruptcy
|
Federal bankruptcy law can help businesses deal with their debt by allowing them to either request a complete liquidation under Chapter 7 or a repayment plan under Chapter 13. To take advantage of a complete liquidation under Chapter 7, most businesses must close doors.
Chapter 7 Bankruptcy
Chapter 7 of the Bankruptcy Code is often referred to as “liquidation bankruptcy” or a "straight bankruptcy.” Under Chapter 7 most businesses must cease all operations and allow the Bankruptcy Court to liquidate all assets to pay the debts.
A business debtor begins the bankruptcy process by filing a petition with the bankruptcy court. Once the petition is filed, an “automatic stay” goes into effect and the creditors are prohibited from making any attempt to collect their debt, including attempting foreclosure and repossession. Along with the petition, or shortly thereafter, the debtor files various written “schedules” and “statements” to inform the Court of its outstanding debts, its current income and expenses, any existing contracts, any current or potential lawsuits, and any recent asset transfers. Upon receipt of the Petition, the Court appoints a Bankruptcy Trustee to handle the debtor’s case.
Chapter 13 Bankruptcy
Chapter 13 is only available to sole proprietors. Sole proprietors cannot use Chapter 13 to file bankruptcy only for the business. Sole proprietors must file as individuals to take advantage of Chapter 13 but can include business debts for which they are personally liable.
If your business is overwhelmed with debt, contact our Law Firm today. We can help you decide if bankruptcy is for you. The only thing you have to lose is your debt. Regain your peace of mind. Call 1-800-862-1260.