Businesses and business owners facing accumulating debt often file for bankruptcy to regain control of their life. Crippling debt from a single creditor or even multiple creditors can put enormous strain on a business and its owners. With mounting debt, businesses and business owners have a range of bankruptcy protections under which they can begin to rebuild.
Complex and Overwhelming Process
Each and every situation requires a different strategy to build and protect the business and its owners. There are a wide range of bankruptcy options, which include Chapter 7, Chapter 11, and Chapter 13. A careful review of your financial and legal obligations is necessary prior to selecting the best approach.
Chapter 7 bankruptcy, which is often referred to as liquidation, releases a debtor from personal liability and offers a wide range of protections from his/her creditors. Most individuals who file under Chapter 7 have past due medical bills, high credit card balances and other unsecured debts that prevent them from being able to keep up with their car payments or mortgage. While a Chapter 7 bankruptcy involves the selling of any nonexempt assets and using the proceeds to pay down creditors, with legal assistance, most cases can be characterized as a no-asset case whereby the debtor is permitted to retain all of his/her personal property. Some exempt assets, which are defined by the State and Federal government include home equity, your pension, insurance, and most household and basic personal possessions.
Chapter 11 is designed for debtors that have had financial struggles but able to demonstrate future business viability business. Debtors may seek a reduction in their debt, adjustments on the terms of repayment, or a business re-organization. Chapter 11 is often more time-consuming and costly, as compared to Chapter 7 and 13. The protections afforded by a Chapter 11 bankruptcy have been utilized by the likes of Lehman Brothers, General Motors, US Airways, and Enron.
Chapter 13 bankruptcy is designed for individuals with sufficient income and non-exempt assets to develop a repayment plan for their debts to creditors. This normally involves establishing a repayment plan over a three or five-year period. Rather than losing the rights to their non-exempt assets, debtors can keep their property under an affordable court approved repayment plan.
If you or your business needs debt relief, it is imperative to consult with an experienced and reputable bankruptcy lawyer. Red Bank bankruptcy lawyers at McOmber & McOmber have been representing debtors for years. We want to get you back on your feet.