As a business owner, you may feel overwhelmed by a bad few months of business and not know which way to turn. Even the most lucrative of businesses can go through hard times, and this is why there are governmental initiatives in place to help businesses get some of their debts discharged.
If you are interested in benefiting from the debt discharge possibilities of Chapter 11 bankruptcy, it is important that you take the time to understand the entire process and the implications that it is likely to have on your specific situation.
Is my business eligible for Chapter 11 Bankruptcy?
If you are a small business and you have debts that are less than $2,566,050, and there is no creditor's committee that is associated with your company, you will most likely be eligible to file for Chapter 11 bankruptcy.
How does the automatic stay work?
When your Chapter 11 bankruptcy filing begins, you will benefit from an automatic stay. This means that you will no longer be subject to creditor collection efforts and activities, and will no longer need to worry about foreclosure or repossession due to debt. Once you have filed, it means that you can stop thinking about your increasing debt and start planning to pay it off as efficiently as possible.
In Chapter 11, you pay off your debts by looking at the way that your business is structured and earns income. From there, you will start to devise a repayment plan over a certain timeframe so that you can work toward becoming debt free in the future.