Your Bankruptcy Options When Closing Down a Business

Should You Seek Protection under Chapter 11 or Chapter 7

Your Bankruptcy Options When Closing Down a BusinessIf you own or operate your own business, but you’re struggling to make a go of it, you need to honestly assess your chances of long term success. The bankruptcy laws can help you wind down a business, allowing you to put most of the losses behind you. What’s the best way to use bankruptcy when you’re winding down a business?

The Chapter 7 Option—Liquidation

In a Chapter 7 proceeding, you are entitled to have certain debts permanently discharged in exchange for your willingness to turn over non-exempt assets to the bankruptcy court. The court may then sell those assets and divide the proceeds among your creditors. You can choose the exemptions under state or federal law, but not both.

With respect to a consumer bankruptcy, you must demonstrate that you qualify to file for Chapter 7 protection by submitting to a “means test,” whereby you show the bankruptcy court that you lack the financial means to repay your creditors over a three-to-five-year period. However, the means test does not apply to business debts. Accordingly, if more than 50% of your debts are non-consumer or business debts, you are automatically qualified to file a Chapter 7 petition.

The Chapter 11 Option—Reorganization or Restructuring of Debt

A Chapter 11 filing is not a good choice for a business that does not plan to move forward. In a Chapter 11 proceeding, you seek to enter into a plan to repay your creditors over a specific period of time. Chapter 11 generally allows you to keep your assets and negotiate new payment arrangements.

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I offer a free initial consultation to all potential bankruptcy clients. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.

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Call Rockwall bankruptcy lawyer Carrie Weir at 972-772-3083 or fill out the contact from below for a free, confidential consultation to discuss your options.

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