If you are struggling financially and plan to file for bankruptcy, you may be wondering what happens to your business. Some people are surprised to hear that a bankruptcy lawyer can actually help them save their business. A New City, New York bankruptcy attorney from our firm can help you figure out the best path forward, and we can make it easier for you to protect your business and potentially give it a brand new start.
What Happens to a Business During Bankruptcy?
When you file for bankruptcy you will trigger something known as an “automatic stay.” This prevents creditors from engaging in any kind of collection activity. Then it is time to figure out a way to pay off creditors in a way that satisfies them. Often this means that they will not get all of the money owed, but most creditors would prefer to get something rather than nothing.
What exactly happens next can vary a bit based on which kind of bankruptcy you have decided to file for. A bankruptcy lawyer will generally suggest that a business owner files for one of these three types of bankruptcy:
Chapter 7: This is often referred to as a “liquidation” bankruptcy. It is often the last resort for an insolvent business. A trustee is appointed to sell off any assets or property of the business. Then this money earned is given to creditors. This is not usually the way to go if you want to keep your business.
Chapter 11: This type of arrangement allows your business to reorganize while it creates a plan to pay off any creditors. This is a complicated type of filing, but it can allow your business to stay open and active while negotiations are being made. Your business could come through the other side with another chance at life.
Chapter 13: A bankruptcy lawyer might suggest this if you are a sole proprietor. Chapter 13 is a reorganization, similar to Chapter 11, but it is designed for individuals. Whether Chapter 11 or 13 works better for you can depend on a few factors, but either option can give your business a chance at surviving.
Do I Need a Bankruptcy Lawyer?
Hiring an attorney can make this process easier. No matter which chapter you choose, filing for bankruptcy requires a lot of paperwork. We can make it easier to organize everything that you need to get this process started. Your lawyer can file a bankruptcy petition, which lists:
- Any assets of your business
- Any liabilities
- A financial statement
- A list of outstanding contracts and leases
We can make sure that you have everything that you need so that you can move on to the next stage of bankruptcy. The sooner you get started, the sooner you can begin to rebuild your business and your financial life.
Contact Our Law Firm
Filing for bankruptcy on your own can be tough. If you want to make sure that you and your business are protected, you should consult with an experienced bankruptcy attorney. Contact the Lauterbach Law Firm and schedule a meeting today.
