Understanding Chapter 11 Bankruptcy
Chapter 11 bankruptcy is used primarily to reorganize companies with large debts. Generally, only corporations file for this type of bankruptcy. However, these services can also be available to small businesses, especially during the COVID-19 crisis. Individual consumers can also file for Chapter 11, but this rarely happens. Chapter 11 bankruptcies allow the debtor to have a financial plan for profitability after bankruptcy. This plan will include the ways in which the debtor will seek new sources of income to pay creditors.
An attorney can show you how to file this type of bankruptcy. The Benenati Law Firm is one Florida firm that specializes in chapter 11 bankruptcy for small businesses. A good business bankruptcy attorney will offer the much-needed legal counsel and help you through the entire Chapter 11 Bankruptcy process. You also don’t have to worry about the paperwork involved because they will ensure everything is handled for you.
Small Business Bankruptcy Under Chapter 11
Small businesses, with 500 or fewer employees, are among the majority of those who file for Chapter 11 bankruptcy. Many times these bankruptcies are dismissed and transferred to Chapter 7. This happens because the courts do not see a way for them to become profitable. The business will have to be able to survive and profit from itself in order to file for bankruptcy. The amount of a small business debt will have to total $ 2,190,000 or less when the petition is filed. Chapter 11 bankruptcy for small businesses allows the benefit of additional time to file a plan and negotiate terms with creditors.
Chapter 11 Bankruptcy For Individuals
Chapter 11 bankruptcy was initially intended for businesses. However, beginning in 1991, the United States Supreme Court held that individuals could also file for Chapter 11. It is very rare for people to file bankruptcy under Chapter 11. However, it is possible, especially for those who still have considerable personal gain and their debts exceed the restrictions set by Chapter 13 and Chapter 7. A common example of a personal bankruptcy under Chapter 11 is a celebrity who made really bad investments and still has income through other means. To study your bankruptcy options, contact a bankruptcy attorney.
The Chapter 11 Bankruptcy Process
The petition is first filed with the United States Bankruptcy Court for the case to begin. From there, creditors cannot pursue current collections or new outstanding debt settlement actions unless a modification is issued by the court. It is an excellent opportunity for the debtor to develop a plan and talk about the most manageable repayment options without worrying about current debts.
After filing a petition, the person or business can carry on with their business without interruption. Meanwhile, under bankruptcy supervision, the debtor will be able to find a good payment plan. This type of bankruptcy is generally less than debt totals lender claims. The court is kept in the know through the useful reports presented by the debtor. To learn more about Chapter 11 Bankruptcy laws in Orlando, contact a Chapter 11 bankruptcy attorney.
Why Is It Not Convenient To File For Bankruptcy Without An Attorney?
Some situations will require that you hire a bankruptcy attorney to represent you. Bankruptcies require preparing many documents. A Chapter 11 bankruptcy attorney can help you through the process and work diligently to lessen the loss you may experience. Your attorney can also help you restructure your business. If your business is struggling financially, you shouldn’t just carry this heavy load on your shoulders. Seek legal advice from an attorney today.