Don’t Be Scared Of The Facts And Figures Related To Business Bankruptcy
The primary reason most businesses file for a bankruptcy is because they either require more time to pay their debts or they want to close up shop for a number of reasons (unprofitable products, impossible-to-repay debt). Businesses hire bankruptcy attorneys to take control of the bankruptcy process, which could fall either under Chapter 7 or Chapter 11. A Chapter 7 bankruptcy is a liquidation, while a Chapter 11 bankruptcy is referred to as business reorganization. When the entire business bankruptcy process is through, the business becomes free of debts. Here are a few facts that you should know about business bankruptcy:
1. There are debts that fall under priority debts. You cannot just avoid paying these debts or pay them in parts. Business owners are held personally accountable for such debts, which include taxes, child support, alimony, student loans, criminal penalties, court fines, and debts resulting from DUI which caused injuries to other people. The best business bankruptcy lawyers cannot help you with such priority debts.
2. The small business can only look for protection from debts that arose before the business filed its bankruptcy petition. Debts that were acquired after the bankruptcy petition date do not fall within the purview of the bankruptcy process.
3. Business bankruptcy attorneys advise their clients to list all their debts in the relevant schedules. The business bankruptcy process cannot discharge debts that are not stated.
4. If it be found that assets, including money, were received by the business owner fraudulently, then the court would not discharge the debts.
5. If the bankruptcy court finds out that the business owner has acted dishonestly, then it can deny debt discharge. Dishonesty would consist of falsification of documents, lying, destroying assets, destroying records, disobeying court orders, and many others.
6. Business bankruptcy lawyers can only help acquire a Chapter 7 discharge once in 8 years.
7. If a debt is secured by an asset (example: lien on office building or home), and the debt is discharged by the court, then it does not mean that the debt must be repaid in cash. The lender that holds the lien can take possession of the property and then sell it.
8. In some instances a debtor may want to pay a debt even after it is released. For example, if a loan is obtained by the business owner to purchase a car, a Reaffirmation Agreement may be entered into by the owner and the lender, so as to allow the former to continue paying the debt, because he still needs to use the asset. The court supervises this type of agreement.
These are a number of details you have to be aware of before approaching or choosing from the best business bankruptcy attorneys.
Bankruptcy could make sense for a number of business owners. Even so, when business debt has become too much, there are alternative choices. Business debt consolidation or debt management might be able to help a business get out of debt without filing chapter 11 business bankruptcy.