Though filing for bankruptcy is a tough thing, you must make sound decisions. For instance, you need to decide the chapter of the law to file for bankruptcy, which can be chapter seven, eleven, twelve, or thirteen.
Note that each chapter comes with specific terms and conditions, which you should learn and understand beforehand. But if you are unsure where to start, a bankruptcy lawyer can assess your business and financial situation and offer their recommendations. Take a look at the detailed description of the four options.
Chapter 7 Bankruptcy
Typically, you should file for chapter 7 bankruptcies when you want to liquidate your assets. According to this chapter, a trustee will take over your business and may liquidate your assets. Everyone that credited your business will then file a claim with the court, asking for a payment.
You should only file for chapter seven when you are too far into your business debt and do not see a way out of it. Although this option won't give you a chance to get back your business, it will enable you to dissolve it with minimal hitches.
Chapter 13 Bankruptcy
Businesses do not file for chapter 13 bankruptcy. However, the individuals owning and running these businesses can file for bankruptcy to cover the losses incurred from the failed business venture. Thus, it can come in handy if you own a sole proprietorship or a private practice.
When filing for chapter thirteen, you need to show the court and creditors that you have a repayment plan that protects your assets. Furthermore, your creditors will expect you to have a regular income to enable you to make monthly payments of the debts you owe them.
Chapter 12 Bankruptcy
Chapter twelve is more or less like chapter 13 bankruptcy. The only difference is that chapter 12 mainly focuses on family farms. With this option, your family can stay on the farm as you develop a plan to pay off the outstanding debts. Therefore, it is the most suitable option for people engaging in agricultural activities because of the unpredictable nature of farming.
Chapter 11 Bankruptcy
This is the ideal product to choose when you are looking to revive and restructure your business. When you file for chapter 11, your business continues with its operations under the court's watch. As such, the creditors cannot interfere with your business practice. It is a great option if you have debts but still have financial gearing to settle them.
Your bankruptcy lawyer will help you assess the four options above and determine which one will work best in your situation. Then, with their guidance, you can reset your financial situation and regain solvency.Share