Many businesses file for bankruptcy because of a number of reasons such as incapacity to pay business debts, needing more time to gather funds to pay debts or having unsuccessful product lines. Businesses employ bankruptcy attorneys to take control of the bankruptcy process, which could fall either under Chapter 7 or Chapter 11. A Chapter 7 bankruptcy is a liquidation, while a Chapter 11 bankruptcy is referred to as business reorganization. When the entire business bankruptcy process is over, the business becomes free of debts. The following are among the business bankruptcy facts that you ought to know about:
1. A number of debts are categorized as priority debts and it is impossible to part-pay or avoid paying these. The business owners are personally accountable for debts like taxes, alimony, child support, student loans, court fines or penalties, criminal penalties imposed by the law, debts on account of injuries caused to others while driving under the influence of alcohol or drugs. With priority debts, even the finest business bankruptcy attorneys could not help you.
2. Only those debts that were acquired prior to the filing of bankruptcy can be protected by the bankruptcy petition. Debts that were acquired after the bankruptcy petition date do not fall within the purview of the bankruptcy process.
3. Clients are advised by business bankruptcy attorneys to list each debt incurred according to their schedule. The business bankruptcy process cannot relieve debts that are not stated.
4. If it is discovered that the business owner obtained any asset, including money, by fraud, then the debt will not be dismissed by the court.
5. If the bankruptcy court finds out that the business owner has acted dishonestly, then it can refuse debt discharge. Example of dishonesty could be lying, falsifying records, destroying property or records, destroying assets, disobeying court orders, etc.
6. A business bankruptcy attorney would be able to assist you in a Chapter 7 business bankruptcy discharge only once in 8 years.
7. When the court discharges debts that are secured by an asset, like lien on an office building, it does not necessarily imply that the debt has to be paid in cash. The creditor holding the lien can then possess the asset and sell it off.
8. There are instances when the debtor may like to continue paying a debt even after the court has already discharged it. For instance, if a loan is obtained by the business owner to purchase a car, a Reaffirmation Agreement may be entered into by the owner and the lender, so as to allow the former to continue paying the debt, because he still needs to use the asset. This agreement is supervised by the court.
These are a number of facts you must be mindful of before approaching or choosing from the best business bankruptcy lawyers.
1. A number of debts are categorized as priority debts and it is impossible to part-pay or avoid paying these. The business owners are personally accountable for debts like taxes, alimony, child support, student loans, court fines or penalties, criminal penalties imposed by the law, debts on account of injuries caused to others while driving under the influence of alcohol or drugs. With priority debts, even the finest business bankruptcy attorneys could not help you.
2. Only those debts that were acquired prior to the filing of bankruptcy can be protected by the bankruptcy petition. Debts that were acquired after the bankruptcy petition date do not fall within the purview of the bankruptcy process.
3. Clients are advised by business bankruptcy attorneys to list each debt incurred according to their schedule. The business bankruptcy process cannot relieve debts that are not stated.
4. If it is discovered that the business owner obtained any asset, including money, by fraud, then the debt will not be dismissed by the court.
5. If the bankruptcy court finds out that the business owner has acted dishonestly, then it can refuse debt discharge. Example of dishonesty could be lying, falsifying records, destroying property or records, destroying assets, disobeying court orders, etc.
6. A business bankruptcy attorney would be able to assist you in a Chapter 7 business bankruptcy discharge only once in 8 years.
7. When the court discharges debts that are secured by an asset, like lien on an office building, it does not necessarily imply that the debt has to be paid in cash. The creditor holding the lien can then possess the asset and sell it off.
8. There are instances when the debtor may like to continue paying a debt even after the court has already discharged it. For instance, if a loan is obtained by the business owner to purchase a car, a Reaffirmation Agreement may be entered into by the owner and the lender, so as to allow the former to continue paying the debt, because he still needs to use the asset. This agreement is supervised by the court.
These are a number of facts you must be mindful of before approaching or choosing from the best business bankruptcy lawyers.
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