Chapter 11 bankruptcy can help you get out of debt and stay in business. Opening a business comes with many risks. Taking on debt can help grow your company, but financial troubles may arise for many reasons, even economic factors outside your control.
If you choose to continue doing business and want to more affordably pay off debts, Chapter 11 bankruptcy is the solution. It can help pay back your unsecured debts that are affecting your financial situation. This kind of bankruptcy filing allows you to restructure your business and its finances. It offers many benefits to business owners, including:
- Preserving your business: As we stated, filing for Chapter 11 allows your business to still operate in its current name. It can continue to serve customers and sell products and services the same way it did before.
- An automatic stay: Chapter 11 bankruptcy puts an automatic injunction on lawsuits and collections activities such as wage garnishments, foreclosures, and repossessions; aggressive creditors can no longer harass you.
- Avoid/recover involuntary transfers: Wage garnishments, repossessed vehicles/equipment, liens, and bank levies may be recovered, or avoided, once you are in bankruptcy protection, and will no longer impact your finances or assets.
- Defer your obligations: In some cases, a debtor may be able to defer payment to certain debts, such as rent or installment payments that were due prior to your bankruptcy petition. These will no longer affect your finances or credit.
- Adjusted interest rates: Debt reorganization can include adjustments to interest rates, so you might be able to lower the interest on loans for vehicles, commercial equipment, and some types of real estate.
- Spread payments out: You can pay off debts over a longer period of time, so restructuring can make it more affordable to submit payments and maintain your business.
- Return to pre-default status: Lenders may accelerate a borrower’s obligation to pay debt if they default on payments or a legal obligation. They may require payment in full as a lump sum. Chapter 11 reorganization can cancel this obligation and restore the original terms of a mortgage or lease.
- Choose the contracts you wish to maintain: You are free to assume or reject any executory contract or unexpired lease. If you want to maintain a real estate, equipment, or other lease contracts, you can do so, and reject contracts that are not profitable.
- Sell your property: Chapter 11 allows you to sell assets even if liens were placed on them in the past. A buyer can purchase your assets without such encumbrances; any previous liens or interests will be disregarded.
As our bankruptcy attorney can explain, the Chapter 11 reorganization process has other financial benefits. You can extend payment of unsecured tax debts for as much as five years. It’s even possible to borrow post-petition. Financing your organization by borrowing money is possible once your reorganization is complete. To top things off, no debts are non-dischargeable, so Chapter 11 bankruptcy can help in many different circumstances.
Our Los Angeles Bankruptcy Attorney Will Work with You
OakTree Law provides a range of bankruptcy services to help clients pay their debts and keep their businesses going. Our Los Angeles or Orange County bankruptcy attorney will explain all your options and provide help in making the right decision for you and your business. Also, our legal process helps avoid some of the risks associated with the bankruptcy process. Request a free consultation or call us at 562-219-2979 today, and we can help regain control of your finances and business!