Are you struggling to keep your business operational because you're overwhelmed with debts? Then, you can benefit greatly by applying for Chapter 11 bankruptcy. A successful application will allow you to erase your debt, which can help to keep your business operational. Whether you have been struggling to pay your workers, rent, or other financial obligations, declaring bankruptcy might be the lifeline your company needs for survival. A lawyer dealing with bankruptcy cases can guide you through the application process to ensure your request goes through. Here are some essential facts you need to know about chapter 11 bankruptcy.
It Will Prevent Legal Action against You
Chapter 11 is similar to other bankruptcy types in several ways. For instance, it can prevent creditors from taking legal action against you. Once you file your application, the court will issue orders barring any person or organization from acquiring your belongings to recover their debt. They will not have a right to request any payments from you or evict you from their premises. Your creditors are also not supposed to file lawsuits against you or institute any collection process until the judge rules on the matter. This will enable you, the creditors, and court officials to negotiate and develop a repayment formula for your debts.
It Will Enable You to Retain Control of Your Business
In some bankruptcy chapters, the trustee supervises the applicant's business and property after a successful application. However, that is not the case with charter 11. In this type, you will remain in control of your business until the bankruptcy period ends. However, the court might still follow up on some of your transactions in specific situations.
It Will Enable You to Have an Effective Payment Plan
Charter 11 is supposed to provide a relief that will enable your business to continue operating as you repay your debts. Your lawyer can negotiate with the trustee to formulate an effective payment plan that will enable this. They can convince the court to modify your interest, reschedule payment dates, or even erase your debt. You might have to make a few modifications to make the plan actionable. For instance, you might have to downsize operations to reduce expenses. The measures might be drastic in some situations, especially if you have huge debts. After formulating the plan, the creditors will review the plan to determine whether the terms are favorable. You will get a discharge if the creditors approve the plan. However, if they don't consent, the court will ask you to make all required payments before you get discharged.
Consult a bankruptcy law firm for advice if you plan to file chapter 11. They will take you through the filing process to tell you what to expect. Your legal advisor will then guide you through the application process to improve your success chances.
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