What Happens When A Business Files For Bankruptcy?

When monthly expenses become unmanageable, many consider bankruptcy a means of debt management. Additional options are available under Chapter 13 of the United States Bankruptcy Code for those who do not qualify for a total discharge of their debt.

In the procedure, you make payments to your creditors over time at an amount within your financial means. You may be able to emerge from the process in a more favorable financial condition without the burden of crushing debt if you file for bankruptcy. However, declaring bankruptcy is not necessarily the best option for everyone. It is necessary to discuss the perks and drawbacks of filing for Chapter 13 bankruptcy with experienced Chapter 13 bankruptcy lawyers who specialize in cases like yours.

Advantages of Chapter 13

Liquidation under Chapter 13 provides individuals with several benefits that are not available under chapter 7. Perhaps most significantly, individuals who file for bankruptcy under chapter 13 are allowed to prevent the foreclosure of their homes. When individuals claim this chapter, the foreclosure process can be halted, and they may be able to catch up on past-due mortgage payments over time.

On the other hand, they must keep up with their mortgage payments while in the chapter 13 plan. The ability to reorganize and extend the payment terms of secured debts (other than a mortgage on a primary residence) is another benefit of chapter 13. This action may reduce the monthly cost.

Creditors who the debtor on “consumer debts owes money” are also shielded by a specific provision in Chapter 13. Perhaps co-signers will be safe from harm thanks to this provision. Lastly, a Chapter 13 bankruptcy acts like a consolidation loan in that the debtor pays to a Chapter 13 trustee, who distributes those funds to the creditors. While under Chapter 13 protection, individuals are shielded from creditors.

Am I Eligible for Chapter 13 Bankruptcy?

To qualify for Chapter 13 bankruptcy, one must meet several criteria. Among these are:

  • The debtor is either a single person or a married couple. This includes those who operate a sole proprietorship or are self-employed.
  • Total secured debts are less than $1,184,200;
  • Total unsecured debts are less than $394,725;
  • A prior bankruptcy petition filed by the person has not been dismissed within the last 180 days as a result of their absence or failure to follow court orders; and
  • Within 180 days of submitting the petition, the person received credit counseling from a service provider that has been approved.

Should I Consult a Bankruptcy Lawyer About Filing for Chapter 13 Bankruptcy?

If you’re having trouble with Chapter 13 bankruptcy, you need the help of an experienced attorney. A bankruptcy lawyer can evaluate your circumstances and advise you on whether or not bankruptcy is a good option. Your bankruptcy attorney can counsel you on the different types of bankruptcy you may be able to file if you have already decided to do so.

Your lawyer will help you gather the required information, file the petition for bankruptcy, and stand in your place in court. Before filing for bankruptcy, it’s essential to weigh the potential downsides against the upsides, and legal counsel can help with this.

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