Declaring bankruptcy is a decision that shouldn’t be taken lightly, especially if you are considering it for your business. Filing a bankruptcy with a S Corp or a Limited Liability Corporation (LLC), can be tricky. You want to know that you have a Business Bankruptcy Attorney that has the knowledge to handle your case with the care it deserves. Upon filing, an “automatic stay” goes into effect, which means the creditors are prohibited from making any attempt to collect their debt, including attempting foreclosure and repossession.
When you look to file a bankruptcy and include your business debts in it you do have options. You will want consider your options before you file. Businesses can file either a Chapter 7 bankruptcy, a Chapter 13 Bankruptcy, or a Chapter 11 Bankruptcy. Which you choose is usually determined by your situation.
Chapter 7 Bankruptcy
A chapter 7 Bankruptcy would remove all your liability for the business debts along with your persona debts. It may allow you to keep your inventory, if any, as well as your personal belongings. There are exemptions that would be used to determine that. A Chapter 7 Bankruptcy is sometimes referred to as a liquidation bankruptcy. There is no debt repayment, except on secured debts that you would normally keep.
Chapter 13 Bankruptcy
Chapter 13 is a reorganization bankruptcy. In a chapter 13 bankruptcy your debts would be reorganized through the courts into a payment plan that you can afford. This type of bankruptcy can be helpful if you are behind on secured asset payments, such as a car or a home. A chapter 13 bankruptcy will also eliminate unsecured debt, such as credit cards, much like a chapter 7 bankruptcy does.
Chapter 11 Bankruptcy
This is a business bankruptcy only chapter of bankruptcy code. In a chapter 11 bankruptcy your debts are reorganized and paid off over time, up to 6 years. During the bankruptcy the business is allowed to remain operating while the debt is paid off. During the bankruptcy a trustee is assigned to oversee the bankruptcy filing, their job is to get money for the creditors, which could include the selling or collection of business assets, any remaining debt would be discharged and the bankruptcy would be closed.
Before you make any decision as to whether you should file or not you should contact a Bankruptcy Attorney. Contact the Law Offices of Jill McDonald today to schedule your consultation.