Just like anyone else, businesses can struggle through difficult financial situations. When this happens, the business owner may worry about what the future holds. If a business is facing a great amount of debt, it may be time for the owner to considering filing for bankruptcy. Bankruptcy is a process that is used when individuals or even businesses are suffering through hard financial times. It can relieve debtors of their stress by allowing them to restructure their finances. Bankruptcy has the potential to create a better financial future for a person or a business.
Chapter 11 bankruptcy is also known as business bankruptcy. Filing for chapter 11 business bankruptcy can allow a business to stay open and continue the daily operations. When the business remains open, it allows them to keep employees on staff while a reorganization plan is put in place. This plan lets the business owner repay their debts over a period of 5 years.
How Do You File For Chapter 11 Bankruptcy?
In order to file for bankruptcy, there is a certain process that needs to be followed. These processes can change depending on the type of bankruptcy being filed. To begin the process of filing for business bankruptcy, the individual needs to file a bankruptcy petition. This petition includes a financial statement, a list of assets, a list of liabilities, and a statement of any outstanding contracts or leases.
When the paperwork is filed, the automatic stay goes into effect immediately. The automatic stay prohibits collectors from harassing debtors through collection activities while it is in effect. This may include collection calls, letters, bank restraints, foreclosures, repossessions, or lawsuits. This allows debtors a sense of ease as they begin to restructure their finances and pay back their debts.
During this process, the meeting of credits will occur. This is a meeting between the debtor and the creditors they owe money to. It exists to determine a reorganization plan for the debtor as they begin to pay back their debt. The plan is required to be approved by the bankruptcy court.
When an individual is granted Chapter 11 bankruptcy, it will prevent any creditors, vendors or banks from shutting down the business. Claiming bankruptcy allows for a slow stream of payments to these creditors, letting the business to continue making revenue.
The overall goal when filing for Chapter 11 business bankruptcy is for the business to create a profit again. This is why it is important to keep the business open to increase net income.
Contact our Firm
If you are filing for bankruptcy and seek the assistance of an experienced attorney, contact the Law Offices of Allen A. Kobler, Esq. today.
If you require the services of an experienced Business Law or Bankruptcy attorney, contact the Law Offices of Allen A. Kolber, Esq. today to schedule a consultation and discuss your options.