It is possible to save a business.You need to assess whether the business is worth saving.When you're confident the business can turn a profit and its assets are worth more than its debts, you should consider saving it.You will have to decide which chapter to file under.Chapter 7, 11, or 13 are available for your business.You can file for bankruptcy by completing the correct forms after considering the unique features of each.The bankruptcy process is designed to be pain-free.Chapter 11 is more complicated than others.If you file under one of the chapters, you would benefit from hiring a lawyer to handle the case.
Step 1: The business is losing money.
If you want to go through with a bankruptcy, you need to identify why the business isn't profitable.The business has hit a rough patch which is temporary.It is possible that your business has been affected by unseasonable weather or the loss of a key employee.If you are certain these conditions won't happen again, then a bankruptcy is a good idea.The business is losing money.If you have never seen a profit, you should consider whether the business will ever be profitable.There is no reason to save a business that can't make a profit.
Step 2: You can calculate the total value of your assets.
You need to compare your assets to your liabilities.Attach a dollar value to the list of business assets.intangible assets like intellectual property or trade secrets are included in common business assets.
Step 3: Determine your debts.
Every debt that your business has should be added up to compare your assets to your debts.It's important to be thorough.If you want to identify all your debts, you need to go through your records.The business may be worth saving if it has more assets than debts.If your debts exceed the value of your assets, you should consider abandoning the business.
Step 4: You are personally liable for any debts.
The creditor can go after your assets to satisfy the debt if you are personally liable for it.You might want to save the business.If you don't, you have no choice but to pursue your personal assets because the business has been closed down.If you look at the loan documents, you can find out if you are personally liable for the debts.Did you sign on your own?If you run a partnership, you may be personally responsible for the debts.
Step 5: The types of bankruptcy to be identified.
You can potentially file for bankruptcy to save your business.You need to understand that this bankruptcy can only save your business if it is a sole proprietor.Taking a personal Chapter 7 can wipe out all business debts while exempting certain property, because you are personally responsible for the debts of your sole proprietorship.You do not want to choose a business Chapter 7.If you did, your business will beliquidated to pay off your debts.It is only for individuals.Only sole proprietors can file.You come up with a repayment plan that lasts three to five years.It is possible to include your business debts from a sole proprietor.Credit cards will be discharged at the end of the repayment period.It's possible to reorganize business debts while still being in business.It is more complex than Chapter 7.You need a lawyer to file for Chapter 11.
Step 6: If you aren't a sole proprietor, pick Chapter 11.
Chapter 11 is needed to continue a partnership, limited liability company, or corporation.Chapter 13 is not for you.You won't be able to save your business if you choose a Chapter 7 bankruptcy.All assets will be sold when it is shut down.
Step 7: If you are a sole proprietor, choose between Chapters 7 and 13
Sole proprietors can choose between the two chapters.How much of your sole proprietorship property can be exempt is one of the factors you will need to analyze.The bankruptcy code allows individuals to exempt certain property, which means the Trustee cannot sell it to pay off your debts.You should read each state's list of exemptions.Some states have state exemptions or a list of federal exemptions.Some states will allow you to exempt thousands of dollars in a vehicle.The vehicle can't be sold if it's worth less than $5,000.States may have exemptions for your primary residence as well as "wildcard" exemptions, which can be applied to any property.If you can exempt all of your property in a Chapter 7, then you could file a personal bankruptcy to wipe out your debts.You would be better off taking a Chapter 13 if you can't exempt all of your property.
Step 8: Meet with an attorney.
A qualified attorney can help you decide which chapter to file under and can answer any questions you have.You can get a referral from your local bar association.You should consider hiring an attorney to represent you in a Chapter 7 or 13 case.People are less likely to get their bankruptcy approved if they file on their own.If you are a corporation or partnership, you must hire a lawyer.You should ask the attorney how much it costs to handle the entire case.A flat fee of $500-3,500 for a Chapter 7 can be offered by the attorney.
Step 9: You should check to see if you qualify for bankruptcy.
There are certain requirements that you have to meet.Discuss these with your lawyer.You can not file under a chapter if you don't meet the requirements.If you want to file for a Chapter 13 bankruptcy, you can't owe more than $383,000 in secured and secured debt.If you do, you will need to file a Chapter 11 bankruptcy in order to save your business.If you have less than $2,500,000 in debt, you may be able to file as a small business.You will have a shorter deadline for your reorganization plan if you file as a small business.The creditors committee can try to negotiate with you or challenge your reorganization, so you won't have to deal with them.
Step 10: You can take a credit counseling class.
If you want to file for bankruptcy, you must take a credit counseling class.When you file for bankruptcy, you will be able to file a certificate of completion.You can find an approved vendor on the U.S. Trustee website.Pick your state from the drop-down box.
Step 11: You need to complete a petition.
The process is easy to follow.You will need to fill out the forms in order to file.They can be picked up from your court.The court locator can be found at http://www.uscourts.gov/court-locator.There should be schedules for you to list your current assets and debts, income and expenditures, as well as contracts and leases.
Step 12: Depending on your bankruptcy, create other documents.
Chapter 7 requires less paperwork than Chapter 11 and Chapter 13Extra documents need to be prepared and filed with the court in order to meet deadlines.You will need to create a repayment plan if you file for a Chapter 13 bankruptcy.The plan will show you how to pay off your debts.A credit counselor can help you create this document.In a Chapter 11 case, you may need to draft a disclosure statement, which contains detailed information about your assets, liabilities, and business affairs.If you are a small business, you don't need to draft this.You need to identify how you will treat each class in a Chapter 11 case.This is similar to a Chapter 13 plan.Your lawyer can draft the document for you.
Step 13: The forms should be filed.
Make multiple copies of the forms and take them to the court clerk.Ask to file.The filing date is what the clerk can stamp your copies on.Depending on which chapter you file under, you will have to pay a filing fee.The creditor list on your schedule will be notified by the clerk.They can't contact you again about your debts after you're notified.The automatic stay is when you have to write down the names and phone numbers of your debts after you file for bankruptcy.They may be able to be sued for violating the automatic stay.
Step 14: You should attend the 341 Meeting of Creditors.
After a debtor files for bankruptcy, they must attend a meeting of their debts.Your debts may be attended by the Trustee.The purpose of the meeting is to make sure you have listed all of your assets and that you can make payments under your proposed plan.Your debts can ask questions.If you have a secured loan, the creditor might ask if you want to keep the loan or give it back.Prepare for the 341 Meeting of Creditors.
Step 15: Make sure to update your petition.
If the information changes, you have an obligation to update your petition and schedules.It is possible that your business income has suddenly increased or decreased.The forms from the court clerk can be used to update.Errors must be corrected if you made them.You could have forgotten to list a creditor or asset when you originally filed.As soon as you discover mistakes, correct them.
Step 16: Represent the proceedings.
There could be many adversary proceedings in a large company's bankruptcies.The judge will make a decision before approving your petition.Chapter 11 bankruptcies include actions to avoid preferential transfers.The bankruptcy code forbids favoring certain people over others.If you make a large payment to a creditor before you file for bankruptcy, you might have to file a lawsuit to get the money back.These actions can also be brought by a creditor's committee.There are actions that can be taken to avoid post-petition transfers.It's possible that you made a transfer after you filed for bankruptcy.There is an objection to proof of claims.After you file for bankruptcy, a creditor can make a claim.You listed a debt on your schedule, but this claim may be for more than that.The trustees can object to the claim.At a hearing, the judge must decide if the claim is valid.
Step 17: Your plan of reorganization should be sent to impaired creditor.
Every creditor who isimpaired will be negatively affected by your reorganization plan if you don't send it to them.The plan can be voted on by the creditor.If at least 50% of the number of impaired creditors approve the plan will be accepted by the class.
Step 18: You can take a debtor education course.
Before you can receive a discharge in a Chapter 7 or 13 bankruptcy, you must take a debtor education course.You have to take it before the discharge.You can take the course online or in person.The U.S. is located in the United States.The Trustee Office has approved vendors on its website.
Step 19: A judge will confirm your plan.
A judge can confirm your case.You might have to answer the judge's questions in court.Depending on the chapter you file the experience will be different.You don't need to attend a confirmation hearing if you file a Chapter 7.The judge will look at your repayment plan to make sure it complies with the law.The judge will hear argument if the plan is objected to.Your confirmation hearing could take 15 minutes if there is no objection.At a Chapter 11 confirmation, the judge will look at the voting of impaired creditors.If you can convince the judge that the plan is fair, he can force them to accept it.
Step 20: You should report on the implementation of your plan.
Even after the judge approves your plan, you still have to stay in contact with him.You must report your progress in implementing the reorganization plan.Even after plan confirmation, you might fight adversary disputes.
Step 21: Receive a discharge.
Your debts are not wiped out until you get a discharge in a Chapter 7 plan.You have to make payments according to your plan.You will only be able to discharge your debts at the end of your three- to five-year repayment period.Contact a lawyer if you miss a payment during this time.You may be able to modify your repayment plan and get a judge to approve it.All pre-petition debts are typically discharged in a Chapter 11 confirmation.You may have to wait for a judge to make a decision.