AuthorJim Mielke

A Business Filing for Chapter 11 bankruptcy protection implies that the company is on the verge of bankruptcy, but believes that it can once again become successful if it is given an opportunity to reorganize its assets, debts, and business affairs.

What should you do if you own or operate a business with mounting debts and your creditors have started to demand payments, which you are unable to pay? You can go into denial and let it all drag out, or you can consider negotiating arrangements with each creditor, but both of these options just delay the resolution of your financial problems with no respite in sight. If your business has mounting debts that you are unable to pay back, then Chapter 11 bankruptcy is a great option for you. It will allow you and your business to reorganize and restructure the debt and it will buy you time to save your business or manage an orderly liquidation.

Many think that bankruptcy is the final station on the train to financial ruin, but statutes under Title 11 of United States Code sets forth provisions that can help one maintain hope and bounce back. An individual struggling under the duress of debt can typically file for bankruptcy either under Chapter 7 or Chapter 13. Under Chapter 13 bankruptcy, an individual has the opportunity to reorganize their finances and avoid losing their assets. It enables someone with a regular source of income to propose a plan to repay their creditors over a three- to five-year period, and the courts have the power to approve the plan without the approval of the lenders as long as it meets certain requirements. This is in contrast to Chapter 7, which provides for discharge of certain debts and liquidation of non-exempt assets without giving any rights towards coming up with a plan of reorganization.