In the modern economy, making ends meet can be a challenging task for a business of any size. Perhaps your business debt has become so great that your revenues are no longer able to keep up with it. In this situation, filing for Chapter 11 bankruptcy protection may be your ticket to financial freedom in the state of Florida.
What is Chapter 11 bankruptcy protection?
Through Chapter 11 bankruptcy filings, businesses that have hefty debt burdens can reorganize themselves. Although mostly corporations file for this type of bankruptcy protection, small businesses can take advantage of it as well. A Chapter 11 bankruptcy enables you to come up with a plan for attaining profitability following your bankruptcy, which might include pursuing new revenue sources or cutting costs. Through this type of filing, you may keep your creditors at bay.
How does Chapter 11 bankruptcy protection work?
Chapter 11 bankruptcy offers the benefit of providing you with more time to submit a plan for reorganization, unlike Chapter 7 bankruptcy where you would simply close your business and sell your liquid assets in order to repay your creditors. However, Chapter 11 bankruptcy can be more costly, complicated and time consuming than other types of bankruptcy filings.
Once a bankruptcy petition is filed, creditors generally cannot attempt to collect unpaid debt. As a result, you can focus on putting together a solid reorganization plan and negotiating more reasonable debt repayment terms without having to worry about your debt obligations. During this time, you can also continue with your business affairs with no interruption. When you do work out new payment terms, the repayment amounts will likely be smaller than your original debt amounts.
Reorganization plans place creditors into various classes concerning how each of their claims will be handled. The creditors who are top priority when it comes to debt repayments are federal and state tax agencies as well as employees who have not received the stockholder interests and wages due to them. In addition, secured creditors and unsecured claims are put into their own classes. Your creditors must vote on your reorganization plan, and the court must approve it.
Facing mountains of debt can be overwhelming for a business owner in Florida. However, filing for Chapter 11 bankruptcy protection with a knowledgeable attorney's guidance can help you get a fresh start financially and give you the hope of being profitable in the years to come.