When your business has a lot of bad debt that has become unsustainable, you should consider seeking business bankruptcy to enable you to offset the debt. Otherwise, creditors and suppliers will always pay you a visit, make threatening phone calls and write you emails to demand payment. To avoid all these stresses, all you need to do is file for bankruptcy. In that regard, you will need to hire a competent chapter 11 Oakland lawyer.
This type of bankruptcy is available to businesses and legal entities that have a lot of bad debt. Individual consumers cannot use it to get rid of their debts. There is one important condition that a business must satisfy to qualify. A business must have a stable income source that can be used to pay off the debts.
While the default type of bankruptcy calls for liquidation of assets owned by the firm to offset their debts, this option provides for reorganization of debts. The debtor is declared bankrupt, and gets all bankruptcy protections. In return, they agree to make monthly payments to the trustee, who distributes the payments to all the creditors. This goes on throughout the bankruptcy period, after which all unpaid debts are written off.
The main benefit of this option is that it allows debtors to retain their assets. Nothing is liquidated, so the debtor can clear their debts silently or confidentially. Secondly, the debtor can continue running their business they way they have been doing in the past. With liquidation, the business may have to shut down.
The first thing that will be done once you file the necessary bankruptcy paperwork is the appointment of a trustee by the court. This is the person who will oversee the whole process. The trustee will start by looking at financial statements, business records and other documentation to assess the financial position of the business as well as the total qualifying debts. The trustee will also take stock of all the assets in the business and put a freeze on their sale. The trustee will also forward all monthly payments to creditors as required by law.
There are some business debts that cannot be written off no matter what. Taxes, for instance, must be paid together with penalties, fines and interest on overdue taxes. Therefore, you should keep this in mind when filing for bankruptcy. After all, a large fraction of your debt may comprise taxes, fines and penalties as well as interest on the same.
The beauty of a chapter 11 is that it provides for debt restructuring. In fact, it is the debtor who is required to come up with a repayment plan to clear their business or corporate debts. The monthly payments are based on the average net income of the debtor, and not what they owe. This means that they can easily clear their debts without making drastic changes in their business.
It is important to note that bankruptcy is a serious legal process that nobody should opt for before considering the pros and cons. If you are running a successful business with a powerful brand, for instance, you should check all the cons to see if bankruptcy is for you. After all, your brand is too valuable to tarnish through a bankruptcy petition. Once your business is declared bankrupt, you may lose business, scare away potential investors and make suppliers uneasy when it comes to dealing with you. The upside is that you will be able to get rid of all your business debts.
This type of bankruptcy is available to businesses and legal entities that have a lot of bad debt. Individual consumers cannot use it to get rid of their debts. There is one important condition that a business must satisfy to qualify. A business must have a stable income source that can be used to pay off the debts.
While the default type of bankruptcy calls for liquidation of assets owned by the firm to offset their debts, this option provides for reorganization of debts. The debtor is declared bankrupt, and gets all bankruptcy protections. In return, they agree to make monthly payments to the trustee, who distributes the payments to all the creditors. This goes on throughout the bankruptcy period, after which all unpaid debts are written off.
The main benefit of this option is that it allows debtors to retain their assets. Nothing is liquidated, so the debtor can clear their debts silently or confidentially. Secondly, the debtor can continue running their business they way they have been doing in the past. With liquidation, the business may have to shut down.
The first thing that will be done once you file the necessary bankruptcy paperwork is the appointment of a trustee by the court. This is the person who will oversee the whole process. The trustee will start by looking at financial statements, business records and other documentation to assess the financial position of the business as well as the total qualifying debts. The trustee will also take stock of all the assets in the business and put a freeze on their sale. The trustee will also forward all monthly payments to creditors as required by law.
There are some business debts that cannot be written off no matter what. Taxes, for instance, must be paid together with penalties, fines and interest on overdue taxes. Therefore, you should keep this in mind when filing for bankruptcy. After all, a large fraction of your debt may comprise taxes, fines and penalties as well as interest on the same.
The beauty of a chapter 11 is that it provides for debt restructuring. In fact, it is the debtor who is required to come up with a repayment plan to clear their business or corporate debts. The monthly payments are based on the average net income of the debtor, and not what they owe. This means that they can easily clear their debts without making drastic changes in their business.
It is important to note that bankruptcy is a serious legal process that nobody should opt for before considering the pros and cons. If you are running a successful business with a powerful brand, for instance, you should check all the cons to see if bankruptcy is for you. After all, your brand is too valuable to tarnish through a bankruptcy petition. Once your business is declared bankrupt, you may lose business, scare away potential investors and make suppliers uneasy when it comes to dealing with you. The upside is that you will be able to get rid of all your business debts.
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Find an overview of the benefits of consulting a Chapter 11 Oakland attorney and more info about an experienced lawyer at http://www.centralcoastbankruptcy.com/chapter-11.html right now.
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