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Chapter 11 Bankruptcy: Solutions for Small Businesses, as well as Big Corporations

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.

Chapter 11 Bankruptcy Explained: How it Works & Who Can File

Chapter 11 bankruptcy is designed to allow struggling businesses restructure their finances & maximize return to their creditors & owners.

Earlier, only large corporations could afford the costs associated with Chapter 11 bankruptcy. Fortunately, Chapter 11 has evolved, and large and small businesses can use it to stay open. Individuals who don’t qualify for Chapters 7 and 13 can file for too. In this article, you will learn: What is Chapter 11 Bankruptcy, how it works, and who all can file for it.

Did You Know You Can Be Forced into Bankruptcy?

When you think about bankruptcy, you may think of it as an option.  In most cases, people make the decision to pursue financial relief by hiring an attorney and filing in court.  You may be surprised to know that you can actually be forced to file bankruptcy.  When we say “forced” we do not mean by circumstance, we mean “forced” by creditors or a governing body.  In many of our articles, we explain that bankruptcy is a legal tool intended to protect individuals and businesses from perpetual financial distress.  On the other side of that coin, bankruptcy is intended to protect creditors from perpetual mounting debt.

Wait…My Bankruptcy Can Be Revoked?

You went through the entire bankruptcy process.  You’re on the road to fixing your financial situation and you are informed that your bankruptcy filing has been revoked and the resulting terms nullified.  This can happen.  The debt that is discharged (unsecured debt) can be reinstated and you can be back at “square one”.  This is one of the major reasons you should use a lawyer and make sure all of the information used in the case is accurate.  How can this happen?

A Quick Summary of Everything You Need to Know About Filing Chapter 13 Bankruptcy

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.

Everything You Need To Know About Chapter 7 Bankruptcies

There are a total of six types of bankruptcies defined under Title 11 of the United States Code. While some of them deal with corporates, municipalities, international debtors and farmers or fishermen, the most common types of bankruptcy filed by individuals and small businesses fall under Chapter 7 and Chapter 13. Chapter 7 involves discharge of certain debts without repayment, whereas Chapter 13 contains provisions which allow individuals with regular wages to develop a plan to repay all or part of their debts over a number of years. Whether an individual qualifies for Chapter 7 or Chapter 13 is partly determined by their income. Chapter 7 is the most common form of bankruptcy in the US with ~65% of consumer bankruptcy filings being Chapter 7 cases.

A Complete Bankruptcy Refresher

Everyone from retail chains, to individuals with medical and credit card debt, and even entire cities can file for bankruptcy. Bankruptcy is sometimes the only way out of debt and while it may have negative short-term effects, it provides a solution to a problem that so many of us will struggle with at some point in our lives. Financial experts and attorneys define the most common debt as “unsecured”. An example of very common unsecured debt is accrued credit card and medical debt. As we know, This doesn’t always happen as a result of a direct mismanagement of our funds. Life can throw us curve balls in the blink of an eye and put us into financial trouble quickly. A perfect example of this our country’s current crisis, the Covid-19 pandemic. There are also things to consider when deciding whether or not to file bankruptcy such as how it may impact your credit, how long the process takes, and the debt thresholds each type of bankruptcy requires. As every situation is different, so let’s discuss each of the most common types.

This Is the Perfect Time to Declutter Your Finances

In 2019, decluttering was all the rage.  Marie Kondo and The Minimalists became household names.  However, did you know that decluttering is also an important thing to do with finances?  Many people are overwhelmed by their own financial situation because they either do not understand it or it is just…messy.  One of the easiest things you can do to help yourself is simplifying your financial life.

If You Are Looking for a Job, Focus on These Opportunities

With the unemployment rate jumping from 3.5% to 4.4 % and multiple non-essential businesses forced to close, the job market is getting unattractive by every measure. Yet, amid this grim situation caused by the coronavirus pandemic, there is still demand for people especially those on the frontlines like online retail, delivery, and health. A number of companies especially the retailers are still hiring despite the prediction that the unemployment rate will still climb higher. Though not all employment opportunities are ideal, they are out there!

When It Is Time to Consider Filing for Bankruptcy

The coronavirus pandemic has left quite of wreckage in its wake, some of which is financial uncertainty and unemployment. Despite the government relief granted under the CARES act, a lot of people are frightened by the uncertainty this period poses. The unemployment rate has increased drastically with predictions of further increase and lots of people are behind on their loan repayments. With the insecurity, most people wonder when it is the right time to file for bankruptcy. Bankruptcy shouldn’t be considered a bad thing as it can be the best step to take you out of financial ruin. So, what should you consider when the idea of bankruptcy surfaces?