How To File Chapter 11 Bankruptcy?
To file Chapter 11, you need to take into consideration the appropriate process for doing so. Chapter 11 is the process of filing bankruptcy for businesses or organizations. In this process, your debts are forgiven, but reorganizing the debt first and repaying it in this manner is also a possibility.
With Chapter 11, the debtor, which is the business or the business owner, can enter into an agreement with the creditors that will help him keep the business moving forward, while still working to pay down debts. Much like Chapter 13 works for a person, Chapter 13 bankruptcy is designed for rebuilding a business’s credit situation.
Who Qualifies?
To file bankruptcy of any type, it is important to talk to your attorney about the process. They will help determine if you qualify for filing bankruptcy or if you may need to work through other forms of repayment instead. Many businesses will qualify for this type of business bankruptcy. Chapter 11 is designed to provide help for debtors that have a limited liability, corporation or partnership. No government entity can file this type of Chapter 11 case, though. With the help of your attorney, you can determine the best route to take.
To file chapter 11, you will need to file a voluntary petition with the court. This petition is designed to explain your situation and to outline what your goals are. For example, all assets and liabilities are outlined. In addition, a statement of financial affairs is considered. Filing this is a mandatory element because it will outline your financial status and provide the court with information on whether or not they should consider filing bankruptcy for you.
The goal of filing this type of bankruptcy is to adjust and then reorganize the debts that you have that relate to the business, the business’s property or other assets. The goal is not to close the business, nor is it to have the business go under. Rather, the goal of Chapter 11 is to reorganize the obligations you have so that the business can continue to operate. During the process, the debtor, or business owner, will remain in possession of all of your property and you, with the help of your lenders, will develop a plan to keep the business functioning so it generates money to help repay the debts. In some situations, a trustee is appointed to manage the filing. If there is any indication of fraud or mismanagement, the trustee may be needed (and is generally requested by the lender) to insure that repayment of the loans and debts is done correctly.
Should I File Bankruptcy?
Should you file bankruptcy? If you have personal debt, then you will need to file Chapter 7 bankruptcy for total discharge of your debts or file Chapter 13 bankruptcy to reorganize your debts and to continue to repay them. If you have business debt, then filing Chapter 11 is a better solution. Making the decision to file bankruptcy, or not, is one that has to be a personal decision. The fact is, knowing when to file bankruptcy is something you need to consider in terms of keeping your business up and running or knowing when there simply is not a way out.
For those that are unsure about how they should file bankruptcy, or when they should file, work with an attorney that specializes in Chapter 11 bankruptcy. The attorney will help you consider all of your debts, all of your plans and help you to work with lenders to minimize the costs and to get a plan of reorganization in the works.