Things You Should Know When Filing Small Business Bankruptcy

It is important for small business owners to understand the chapter 11 bankruptcy process. That makes getting help from bankruptcy lawyer critical. This could enable you to be thorough with the information pertaining to a chapter 11 bankruptcy filing process.

Although most of the debts prior to claiming bankruptcy are dischargeable, not all debts qualify for a discharge under bankruptcy rules. The debts that are eligible for a discharge include business debts, back rents and credit card bills. Typically, a discharge is a permanent order issued to the debtor’s creditors barring them from taking any legal action against the debtor as well as prohibits any kind of communication with the debtor including telephone calls, letters and personal contacts. However, discharged debts do offer a ray of hope to small business owners by providing them a chance to restart or reorganize their business once again. Chapter 11 applies to most businesses as far as bankruptcy law goes. Thereby it is of critical importance for small business owners who are considering filing for a bankruptcy to understand the chapter 11 bankruptcy process.

As per bankruptcy code, a “small business” debtor is defined as a person who is engaged in commercial or business activity that has an aggregate turnover not exceeding $ 2,000,000. Once a debtor qualifies for a small business bankruptcy, the case is put on a fast track procedure and treated differently than a regular chapter 11 case. And as far as the process goes, the bankruptcy court may conditionally approve a disclosure statement which could be linked to a confirmation hearing although the appointment of a creditors’ committee and a separate hearing is not mandatory. Classically, filing for a chapter 11 bankruptcy procedure facilitates reorganizing or restructuring of the small business faced with financial difficulties. The entire chapter 11 bankruptcy process involves formulating a plan, while continuing with the business operations, for “paying back the discharged debts” to the creditors. Usually, the court procedures are completed within as less as four months. But certain non-dischargeable debts like tax claims, governmental penalties, co-operative housing fees, etc. are “non dischargeable debts” under chapter 11 bankruptcy.

Furthermore, if a bankruptcy filer submits a voluntary petition for chapter 11 bankruptcy relief, he automatically assumes the identity of “debtor in possession”. While a debtor continues to be in possession of the “small business” until the reorganization plan is not approved by the court or a chapter 11 trustee is appointed. Alternatively, such a case might even be dismissed by the bankruptcy court or converted to a chapter 7 personal bankruptcy. This makes it imperative for small business owners to have some Filing chapter 7 which could help them to understand the intricacies involved in filing business bankruptcy procedures. Nowadays there are plenty of professional online services who offer bankruptcy solutions to small business owners. Using a reputed bankruptcy service like www.LoansStore.com/Bankruptcyonly could enable you to get proper guidance that is required for filing a business bankruptcy. This is because such services employ qualified and highly experienced bankruptcy attorneys whose help could be critical when filing bankruptcy.

Prior to filing for a small business bankruptcy, it is imperative for the debtor to know that while most debts are dischargeable under a chapter 11 bankruptcy procedure, not all debts can qualify for a discharge. Hence, a thorough understanding of the chapter 11 bankruptcy process is essential when you are out to file for chapter 11 bankruptcy.