The thought of declaring bankruptcy for your business is a frightening one, yet sometimes it is the bankruptcy that can save a business. How your business is allowed to move forward depends on which type you file. Here are the differences between a Chapter 7, a Chapter 11, and a Chapter 13 bankruptcy and how an attorney can help you choose.
Chapter 11 Allows Your Business To Remain In Operation
With a Chapter 7 bankruptcy, you will be required to liquidate all of your company’s assets and your business will be shut down. In some cases, this is, unfortunately, the best choice for the investors and individuals who run the company. However, if you wish to remain in operation, a Chapter 11 bankruptcy will allow you to do so. Your debts will be restructured and paid back to your creditors over time as your business continues to make money.
Chapter 11 Allows You To Keep Disposable Income
With a Chapter 13 bankruptcy, you are required to turn over your disposable income to the bankruptcy trustee during the commitment period. This can be difficult for a business owner who is trying to keep their company afloat. A Chapter 11 bankruptcy, on the other hand, does not have such a requirement. The debtor is allowed to keep his or her disposable income, but it is important that the payment plan that is determined by the courts be equal or less than the amount of disposable income the debtor has in order to ensure repayment success.
Chapter 11 Gives You More Flexibility
With both Chapter 7 and Chapter 13 bankruptcies, there are stringent deadlines that must be adhered to. However, a Chapter 11 bankruptcy does not have such deadlines. This gives business owners more time to get their affairs in order and to document all of their creditors so they can bring forward the appropriate information in a reasonable time frame.
When To Contact An Attorney
It’s not always obvious going into bankruptcy which type would be best for your business and your individual situation. Because no two cases are the same, an attorney can help you go over the pros and cons of each type of bankruptcy based on your unique information. Contact Attorney Joel M. Aresty P.A. for more information about business bankruptcy and how filing for bankruptcy may help you get out of debt while still running your business. Many businesses have filed for bankruptcy early on and have gone on to become successful. Call today for a consultation at (305) 904-1903.