Small Business Bankruptcy Filing Help

One should hope that even the most hated competitors do not have to face bankruptcy. Sometimes severe losses in business compel the business owner to close the business operation. The business owner in these circumstances has to either file business bankruptcy or be prepared to go behind bars. It is obvious that filing business bankruptcy is better than being jailed for the business loss and the debts you cannot repay. The provision of business bankruptcy has been made to protect the rights of the lenders as well as the debtors.

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Filing Of Small Business Bankruptcy:

The business owner or the creditors can initiate filing business bankruptcy. Once bankruptcy is filed, both the lender and the debtor have limitations at functioning. The business owner can neither transfer nor sell the assets. The lenders or the creditors cannot call on the business owner for collection of the debts.

Upon successful small business bankruptcy filings, the secured creditors have preferential payment over the unsecured creditors. The collateral is used to get rid of the debts. If the amount is insufficient at getting rid of the debt the pending debt is put in the category with unsecured debts such as utility bills and credit cards.

Two Types of Business Bankruptcy: Chapter 7 and Chapter 11

According to business bankruptcy laws there are two kinds of filings; one is Chapter 7 the other is chapter 11. Either of these can be used especially for small business bankruptcy.

Chapter 7 Bankruptcy

Among the business bankruptcy options the most popular is the chapter 7 bankruptcy. On successful filing for bankruptcy, the bankruptcy court appoints a trustee. This trustee is entrusted with dual responsibilities. The first responsibility of the trustee is the liquidation of the non-exempted assets of the company and the second responsibility is to disburse the proceeds among the eligible lenders. The filing of chapter 7 bankruptcy takes very less time and famous for providing fast relief from debt.

Chapter 11 Bankruptcy

Filing business bankruptcy chapter 11 is a lot different from chapter 7. While liquidation is the main theme of chapter 7, rehabilitation or reorganization of the business is the theme of chapter 11 bankruptcy. Filing chapter 11 bankruptcy has dual purpose. The first goal is to restructure business. The second goal is to permit the business in such a way that the debts are repaid by the revenues generated. Just like chapter 7, the trustee appointed by bankruptcy court supervises the process.

Which one is Better? Chapter 7 or Chapter 11

It all depends on the wish of the debtor whether to opt for chapter 7 or chapter 11 bankruptcy. This also depends on the business bankruptcy law. Filing Chapter 7 is applying for fast relief from debt through liquidation of non-exempted assets of the company. On the other hand, filing chapter 11 bankruptcy is paying the debts over an extended period of time through restructuring the business. Thus, Chapter 7 is instant relief from debt while chapter 11 bankruptcy is relief from debt over an extended period of time.

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How we can help in Filing Business Bankruptcy

Attorneys at Bankruptcyonly helps you

• At the documentation needed for filing business bankruptcy
• With all the relevant business bankruptcy information available for small business or large business
• Increase the possibility of success
• Reduce the mental and physical stress to file the papers systematically
• Presentation of the case forth the bankruptcy court
• Latest changes if any in the business bankruptcy law
• Stop the collection calls from the creditors or the collection agencies