Filing for bankruptcy for your business
The right bankruptcy chapter
There are different kinds of bankruptcy chapters that you can file. In a chapter 7 bankruptcy, your assets can be liquidated completely and your business may dissolve.
A chapter 11 and 13 may enable you to pay for your debts over time and possibly give you protection against your creditors. Also in a chapter 13, sole proprietorships may file if they have less than $800,000.000 of secured debts and less than $250,000.00 of unsercured debts.
You may need to consult with a bankruptcy attorney for legal advice on whether you qualify for a given chapter.
Your bankruptcy lawyer
If you do consult with your bankruptcy attorney, there may be some documents will want to provide for your case. These may include data on your company’s finances, income and various debts. This way may allow your attorney to file the appropriate paperwork with the bankruptcy court.
Protection from creditors
It is likely that you may be granted protection from harassing creditors almost immediately upon filing for bankruptcy. The court might contact your creditors and send notifications that your business is in the bankruptcy process.
If you filed a chapter 7, then you might expect a meeting of creditors. During this time, you may be obligated to relieve all of your non-exempt assests in your bankruptcy to an appointed trustee.
The trustee may decide to sell the remaning assets to your creditors as collateral.
Chapter 13 repayment plan
In a chapter 11 or 13, you may be held responsible for a repayment plan with your creditors. However, there is a chance that you may have to convice your creditors that the reorganization of your debts is better suited for them over a complete liquidation of assets. At that point, it might be up to your creditors whether you may continue with a repayment plan or file for a chapter 7 bankruptcy.
If you do file for a chapter 7, then it may take up a few months for your debts to be cleared.
Bankruptcy may not cover all debts
It is possible that you may still be held liable for certain debts. These may include student loans, certain legalities or taxes. A bankruptcy lawyer may be able to go over what you are still responsible for after filing for bankruptcy.
If you decide to file a chapter 11 bankruptcy, then you may not be able to keep control of your business once you begin the process. Your trustee may have the right to take these rights from you, although it is not very common.