If you’re a business owner with debt troubles, then you’re not alone. The risks associated with running a business are high, and bankruptcy laws take that fact into account. Heavy debt obligations may necessitate filing for bankruptcy, but depending on your particular situation, you may have a number of options for out-of-court solutions.
Chapter 11 is generally for businesses that can feasibly reorganize while continuing operations. Chapter 11 is also a good option for some individuals with a high net worth. If personal liability is your concern and the structures of your business and personal finances meet certain criteria, then Chapter 7 bankruptcy may be the route that provides the most benefits.
Filing for Chapter 7 puts an automatic stay on creditor actions, including foreclosure, garnishment and repossession of property. Depending on your specific situation, filing for Chapter 7 may also result in the discharge of your unsecured debt or afford you valuable time to restructure your finances.
In any case, business owners who have encountered serious debt problems should have legal counsel that can look at and assess the big picture and provide cost-effective solutions. Going to court isn’t always necessary, as an out-of-court workout may be an option. With the help of an experienced legal team, you may be able to renegotiate interest rates, pledge certain items of collateral, exchange your debt for equity or restructure your debt.
Shulman Bastian Friedman & Bui LLP started out as a bankruptcy boutique law firm. To learn more about our legal practice and our lawyers, please visit our bankruptcy overview.