Steps to Follow in Filing Commercial Bankruptcy for a Business
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Posted on December 25, 2007
Filed Under Debt Consolidation, Avoid Bankruptcy, Business Bankruptcy, Chapert 11, Chapter 13, Blog Carnivals |
Running a business is not an easy task. Running a successful one, stress free, is near impossible. Take a business’s financial situation for example. There are times when it becomes necessary to file for bankruptcy due to circumstances, some unavoidable and unforeseen, within your business which has led to a crippling debt, slim prospects of regaining stability and no ability to sustaining a profit.
Now before you go filing for a commercial bankruptcy, most bankruptcy lawyers strongly recommend selling off your business as well as its assets. There is a good chance you can receive a better price now than later. You also have the ability to transfer certain intellectual property, too. Doing so also puts you in the position of choosing which creditors to pay alleviating some of the financial pressures before you go to bankruptcy court.
Here are some of the steps involved in filing for a commercial bankruptcy:
- Filing for bankruptcy is a confusing process that should be done correctly. It is advisable for you to consult a bankruptcy lawyer to help with the process. Make sure they can attest to past experience working for both creditors and debtors. Your lawyer cannot and must not have any type of connection with your business. This arrangement can cause a conflict of interest between you and your creditors.
- After you have decided on a lawyer to use, have them set up a meeting with you, your financial advisers and the board of trustees. This meeting is used to decide whether the business can be saved or not. You have a few different options. The first being a Chapter 11 which allows for the reorganization of your business debt. You will need to make decisions on some internal changes which can allow you to pay your creditors on time. If the business finances are a complete wreck and cannot be salvaged then Chapter 7 is your best option. There is no coming back from a Chapter 7 since it is end of the commercial venture.
- Your next step is file the appropriate bankruptcy petition with the court. Documentation listing all of your creditors, with the amounts due to each as well as the net income of your business all need to be included with this petition.
- Be aware of the fact that after you file for Chapter 7 bankruptcy you may not be completely released from your loans. Your lawyers will compare your business’s net worth of both secured and unsecured debts with the value of its commercial assets. If they see any possibility of the courts going after your personal affairs to pay your small-business debt, they should have a legal defense prepared to protect your assets.
- If your lawyer recommends filing for a Chapter 11 bankruptcy, then you next step involves working on a debt-management plan. This plans shows how you pay back each of your creditors as well as how much. It also shows how you will be changing your business. These restructured plans need to be paid off in roughly 5 years and presented within 120 days after bankruptcy has been filed.
The Credit Exchange Corporation offers financial services such as Financial Analysis, credit card counseling and Debt Settlement through an affiliate network of debt consolidation companies and debt management companies. Visit us at www.thecreditexchange.com
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