Your Bankruptcy Options When Continuing a Business

What’s Best for You—Chapter 11 or Chapter 7?

If you own a business that’s struggling, but you know it’s just a matter of time before things turn around, you can still use the bankruptcy process to your benefit. When you file a bankruptcy petition, you will immediately get the benefit of the automatic stay, which prohibits your creditors from calling, writing or bringing legal action (other than through the bankruptcy process) to collect the debt. In addition, you may get relief from making payments for a while, so that you can get caught up.

The Chapter 7 Option-Liquidation

A Chapter 7 petition will allow you to immediately discharge certain debts, but at a cost. To rid yourself and your company of those debts, you must agree to sell all assets not determined to be exempt under state or federal laws. If your business is one that does not require any meaningful assets—you have no inventory or equipment, no tools or machinery—then you may want to simply get rid of your debts and start over again. In most instances, though, when you want to continue with business operations, you want to seek protection under Chapter 11.

The Chapter 11 Option—Reorganization

In a Chapter 11 filing, you and your attorney work with your creditors, putting together a plan that allows you to keep all your assets, and negotiate new payment plans or terms. Typically, the reorganization plan will be in place for three to five years. The reorganization plan must be submitted to and approved by your creditors. If it is, you won’t have to worry about attempt to collect on the debt, as long as you make the agreed upon payments. At the end of the bankruptcy period, most amounts remaining due to creditors will be discharged.

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I provide a free initial consultation to anyone with questions or concerns regarding a bankruptcy filing. 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.