Life can be unpredictable, and unexpected business expenses, lawsuits, and economic issues can quickly put a small business in debt. If you’re looking for a way to maintain control of your business while still getting your debts under control, Chapter 11 bankruptcy could be the right choice for you and our Chapter 11 bankruptcy lawyer can help.
The team at ARM Lawyers is dedicated to helping you manage your debts and lay the groundwork for a bright future for your business. We have more than 100 years of combined experience in this field, and we can find the right solution for you.
If your business is struggling with debt, Chapter 11 bankruptcy is one path to consider. It is the only type of bankruptcy available for most businesses that will allow the business to continue to operate.
Should I consider Chapter 11 bankruptcy?
The goal of Chapter 11 bankruptcy is to restructure your business debts and allow you to maintain control of your company. Our Chapter 11 bankruptcy lawyer may recommend this option for clients who:
- Are interested in reorganizing their business so it can stay open
- Want to avoid the danger of immediate closure
- Have more secured and unsecured debt than they can pay
- Are willing to pay some or all of their debts over time
Are Creditor Calls Keeping You From Running Your Business?
Calls from creditors are stressful for everyone, but they can be particularly damaging to a small business owner. Creditor calls often interfere with client or customer calls, alert employees to the company’s precarious financial situation, and make it difficult for a business to continue normal operations.
When a business files Chapter 11 bankruptcy, creditors must immediately stop their collection phone calls and any other collection attempts. Business owners who want to continue running their company have the opportunity to restructure operations in a financially feasible way, while those who wish to sell their company have the chance to market and sell property while winding down daily operations.
Managing Your Financial Obligations With Chapter 11 Bankruptcy
Chapter 11 bankruptcy streamlines your debt repayment efforts and offers a manageable way to restructure your financial obligations. A Chapter 11 bankruptcy plan separates creditor claims into different classes and prioritizes payments accordingly, restructuring the terms of your unsecured and secured debt. Secured creditors are highly prioritized during this process. If your collateral is worth less than the amount you owe, you might be able to crawl down payments—this reduces the balance due to the current market value of your property. Your plan might also alter the terms of your leases or contracts, reorganize your tax debt, and negotiate payment amounts for your unsecured debt. With a lower monthly payment and a clear plan moving forward, you can finally have some breathing room.
Can I file Chapter 11 if I want to close my business?
Absolutely. If you do not want to keep the business open, but instead, want to shut it down, you can use a bankruptcy to do that. You can use a Chapter 11 bankruptcy for a controlled liquidation of your business assets. Alternatively, if you want a lower cost, lower effort option, your business can file a Chapter 7 bankruptcy to have the Chapter 7 trustee liquidate it for you.
Can a person file for Chapter 11 bankruptcy?
Yes! This surprises many people, but Chapter 11 bankruptcy is not just for businesses. People can file too! Normally a Chapter 11 is more complex than the average person needs though. We would normally suggest a Chapter 7 bankruptcy or a Chapter 13 bankruptcy for individuals.
There’s only a handful of cases in which we’d recommend a Chapter 11 for an individual. The most common case is when the person makes too much money for a Chapter 7 bankruptcy, but has too much debt for a Chapter 13 bankruptcy. This is called the Chapter 13 “debt ceiling”. It’s very high though so most people don’t hit it. As of April 1, 2019, if your secured debts (mortgages and liens) add up to more than $1,257,850, or your unsecured debts add up to more than $419,275, you may not be able to file a Chapter 13 bankruptcy and a Chapter 11 bankruptcy may become your best option.
There is also a bit more flexibility in a Chapter 11 Plan than in a Chapter 13 Plan. Sometimes, that justifies filing a Chapter 11 rather than a Chapter 13, but this is rare. Normally, a Chapter 13 is sufficient for people.