The main reason most businesses file for a bankruptcy is because they either need more time to pay their debts or they desire to close up shop for a variety of reasons (unprofitable products, impossible-to-repay debt). Business bankruptcy lawyers are hired by businesses to oversee the bankruptcy process, which can be 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. The following are some of the business bankruptcy facts that you ought to know about:
1. Certain debts are categorized as priority debts and it is just not possible to part-pay or avoid paying these. 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 individuals. The best business bankruptcy lawyers cannot help you with such priority debts.
2. Only those debts that were incurred prior to the filing of bankruptcy can be covered by the bankruptcy petition. Those debts that were obtained after the date of the filing of the bankruptcy petition could not be covered by the bankruptcy protection laws.
3. Business bankruptcy attorneys advise their clients to list all their debts in the appropriate schedules. If a debt is not listed, it cannot be discharged by the bankruptcy process.
4. If it be found that assets, including money, were received by the business owner fraudulently, then the court would not release the debts.
5. The court can deny the debt discharge in the event that it discovers an act of dishonesty by the business owner. Example of dishonesty could be lying, falsifying records, destroying property or records, destroying assets, disobeying court orders, etc.
6. A business bankruptcy attorney would be able to assist you in a Chapter 7 business bankruptcy discharge only once in 8 years.
7. If a debt is guaranteed 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. There are instances when the debtor may like to continue paying a debt even after the court has already discharged it. 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. This agreement is supervised by the court.
These are a number of details you must be mindful of before contacting or choosing from the best business bankruptcy lawyers.
1. Certain debts are categorized as priority debts and it is just not possible to part-pay or avoid paying these. 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 individuals. The best business bankruptcy lawyers cannot help you with such priority debts.
2. Only those debts that were incurred prior to the filing of bankruptcy can be covered by the bankruptcy petition. Those debts that were obtained after the date of the filing of the bankruptcy petition could not be covered by the bankruptcy protection laws.
3. Business bankruptcy attorneys advise their clients to list all their debts in the appropriate schedules. If a debt is not listed, it cannot be discharged by the bankruptcy process.
4. If it be found that assets, including money, were received by the business owner fraudulently, then the court would not release the debts.
5. The court can deny the debt discharge in the event that it discovers an act of dishonesty by the business owner. Example of dishonesty could be lying, falsifying records, destroying property or records, destroying assets, disobeying court orders, etc.
6. A business bankruptcy attorney would be able to assist you in a Chapter 7 business bankruptcy discharge only once in 8 years.
7. If a debt is guaranteed 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. There are instances when the debtor may like to continue paying a debt even after the court has already discharged it. 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. This agreement is supervised by the court.
These are a number of details you must be mindful of before contacting or choosing from the best business bankruptcy lawyers.
About the Author:
Bankruptcy could make sense for many business owners. However, when business debt has become too much, there are alternative options. Business debt consolidation or debt management might be able to help a business get out of debt without filing chapter 11 business bankruptcy.
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