Alternatives to Bankruptcy for Small Business Owners
Prior to meeting with a bankruptcy attorney, it is essential to have a fundamental comprehension of the available business bankruptcy options. Having a fundamental understanding of the business bankruptcy options will make your consultation with a bankruptcy attorney more fruitful. Examples include:
1.Chapter seven. This insolvency option is available to companies with no future or means to restructure their debt. This option is referred to as ""liquidation"" because the company's assets will be liquidated to generate funds for creditor repayment. Although Chapter 7 is best suited for individuals and solitary proprietors, corporations and limited liability companies may also file for Chapter 7 business bankruptcy.
11.Chapter 2. In contrast to Chapter 7, Chapter 11 is for businesses that have a plan for their future and can continue to operate with reorganization of their debts and prudent financial management. Chapter 11 is one of the most complex filing options, so it is imperative that your business obtain the advice of a bankruptcy attorney if it intends to file under Chapter 11. However, only sole proprietorships, corporations, and partnerships are permitted to file for Chapter 11 bankruptcy. A court-appointed trustee will likely maintain a watchful eye on the business and its operations during and after the bankruptcy filing.
Chapter 13: 3. Similar to Chapter 11, Chapter 13 bankruptcy filings for businesses permit the reorganization of debts. Nonetheless, the business must satisfy Chapter 13's eligibility requirements, which a bankruptcy attorney can assist you in determining. This is a popular option for business owners whose personal assets are intertwined with their business, as Chapter 13 provides greater protection for significant assets like a home. Remember that a bankruptcy attorney will also assist you in safeguarding your valuable assets.
12.Chapter 4. This option is designed specifically for ""family farmers"" and ""family fishermen."" Under this business bankruptcy option, debt is reorganized into a three- to five-year payment plan.
Still uncertain of the best option for your business? Consider whether your business should be reorganized or liquidated before consulting with a bankruptcy attorney. This straightforward inquiry determines whether Chapter 7 is a viable option. Consider how much of the debt is secured and whether you could begin again after the liquidation process. Disclosure of your complete circumstance to the bankruptcy attorney will enable him or her to provide the best advice.""
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