In bankruptcy, a person or business can go through the court to get legal debt relief. The goal of Filing Bankruptcy in Indianapolis IN is to allow the person or business to start fresh financially, while allowing creditors to recover some of their losses. Businesses can file either Chapter 11 or Chapter 7 bankruptcy; once the process has started, creditors cannot make further collection attempts until the case concludes.
Filing Chapter 7
Chapter 7 entails the liquidation (selling off) of business assets to repay debts. The process begins when the business owner files a petition in bankruptcy court. The petition must, by law, list the business’ debts, property and financial history.
After the petition is received, the court will choose a trustee whose job it is to sell the business’ property to pay debts. Some debts are dischargeable in Chapter 7 bankruptcy, meaning that the debtor is no longer liable. Other debts, such as back taxes, prior bankruptcies and government penalties, cannot be discharged. After all debt has been eliminated or paid, the business will likely no longer exist.
Chapter 11
In Chapter 11, a business can reorganize, pay off its debts, and continue operations once the bankruptcy case is finalized. The process starts as the business files a Chapter 11 petition, and from that point the business’ ownership has four months to form a reorganization plan. To return to profitability, the business plan may involve the elimination of certain components.
Bankruptcy Types
Every bankruptcy type has its pros and cons, as discussed below:
Chapter 7 is simpler and quicker than Chapter 11, and in most cases, only one court appearance is necessary. Those choosing this type will have to sell some of their assets, and the court will choose a trustee to oversee the case. Most businesses dissolve after Filing Bankruptcy in Indianapolis IN.
Chapter 11 allows most businesses to continue operations without selling assets. Because the business will keep operating, no trustee is required. However, these cases are more complex and time consuming than Chapter 7, and more debt must be repaid.
Filing for bankruptcy as a business owner can be frustrating and complex and a bankruptcy attorney can simplify the process. For bankruptcy help, you should Visit The Wright Law Group LLC, because the attorneys will be familiar with your state’s bankruptcy rules and regulations.
