Many businesses look at a business bankruptcy as a way to get out of debt, however, bankruptcy is not that easy. You need to determine whether or not your business has great potential. A Chapter 7 bankruptcy, which would liquidate the business, will be applicable if your business doesn't have a future anymore. On the other hand, filing for a Chapter 11 bankruptcy would be ideal if you see that your business could still hack it in the future. Consider pondering on and preparing the following before you file for business bankruptcy:
1. Prepare tax records, financial statements and contracts, both executed and under execution. These need to be filed together with the bankruptcy petition.
2. Filing for business bankruptcy requires an attorney who is an authority at your type of bankruptcy. For instance, filing for a Chapter 11 bankruptcy would need you to have someone who is an expert in Chapter 11 bankruptcy and not with a Chapter 7 bankruptcy. This is primarily due to the fact that a Chapter 7 bankruptcy lawyer may not be good at presenting your case to creditors, which is required in a Chapter 11 bankruptcy. A Chapter 7 bankruptcy is very straightforward in a way that the court would just help you liquidate your business. Reorganization under Chapter 11 bankruptcy would require negotiations between you and your creditors, which would be more complex as compared to liquidation.
3. A Chapter 12 bankruptcy is for farmers, while a Chapter 13 bankruptcy, which is also known as a wage earners’ bankruptcy, is for sole proprietors, who are also wage earners.
4. Be honest and truthful with your lawyer and tell him every single financial detail that will help your bankruptcy case. Let him know about those things that are categorized as priority debts which consist of employee benefits, child support, alimony, etc. Remember to inform your lawyer about how many creditors you have and whether they belong to secured, unsecured or partially secured creditors.
5. If you would be opting for a Chapter 11 bankruptcy, you will be obligated by the court to be the case trustee (except of course in cases of fraud), and you will then become a debtor in possession. There will be an appointed committee of creditors, and a reorganization plan would be required of you to be submitted to court. If the committee of creditors approves of the reorganization plan you submit, then the court will give its affirmation. If Chapter 7 bankruptcy was your option, then you need to submit to the court a list of your non-exempt assets, which will be sold off, and the proceeds shall be split up among creditors according to their priority.
Indeed, filing for business bankruptcy is not that easy and could get quite complicated in the process. This is why it is essential for you to hire a business bankruptcy lawyer who have had in depth experience in dealing with the type of bankruptcy that you would be filing. Good luck.
1. Prepare tax records, financial statements and contracts, both executed and under execution. These need to be filed together with the bankruptcy petition.
2. Filing for business bankruptcy requires an attorney who is an authority at your type of bankruptcy. For instance, filing for a Chapter 11 bankruptcy would need you to have someone who is an expert in Chapter 11 bankruptcy and not with a Chapter 7 bankruptcy. This is primarily due to the fact that a Chapter 7 bankruptcy lawyer may not be good at presenting your case to creditors, which is required in a Chapter 11 bankruptcy. A Chapter 7 bankruptcy is very straightforward in a way that the court would just help you liquidate your business. Reorganization under Chapter 11 bankruptcy would require negotiations between you and your creditors, which would be more complex as compared to liquidation.
3. A Chapter 12 bankruptcy is for farmers, while a Chapter 13 bankruptcy, which is also known as a wage earners’ bankruptcy, is for sole proprietors, who are also wage earners.
4. Be honest and truthful with your lawyer and tell him every single financial detail that will help your bankruptcy case. Let him know about those things that are categorized as priority debts which consist of employee benefits, child support, alimony, etc. Remember to inform your lawyer about how many creditors you have and whether they belong to secured, unsecured or partially secured creditors.
5. If you would be opting for a Chapter 11 bankruptcy, you will be obligated by the court to be the case trustee (except of course in cases of fraud), and you will then become a debtor in possession. There will be an appointed committee of creditors, and a reorganization plan would be required of you to be submitted to court. If the committee of creditors approves of the reorganization plan you submit, then the court will give its affirmation. If Chapter 7 bankruptcy was your option, then you need to submit to the court a list of your non-exempt assets, which will be sold off, and the proceeds shall be split up among creditors according to their priority.
Indeed, filing for business bankruptcy is not that easy and could get quite complicated in the process. This is why it is essential for you to hire a business bankruptcy lawyer who have had in depth experience in dealing with the type of bankruptcy that you would be filing. Good luck.
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