Jacksonville Business Bankruptcy Lawyer
Running a business can have ups and downs. Individuals who choose to start their own companies are taking a risk, and sometimes, those businesses face financial hardship. If a business can no longer pay vendors and creditors, the owner might want to look into options for filing for bankruptcy. The right chapter under which to file varies based on the facts of the case.
It is important to discuss your options with an experienced Jacksonville business bankruptcy lawyer. Whether you plan to close the business or need help to get through a rough time, there might be possible strategies available to help you. Call the Law Offices of Carol M. Galloway today at 904-694-5489 to discuss your case.
Filing Chapter 7 Bankruptcy for a Business
Chapter 7 bankruptcy is often the best solution for businesses when the owner plans to close shop. Both companies and individuals can file under Chapter 7, which allows for the liquidation of non-exempt assets. A business with few assets can file and discharge many of its debts. If the court approves of the business’ application for bankruptcy, the business can dissolve in an orderly fashion without exposure to lawsuits and liability from creditors after the closure.
While partnerships, corporations, and sole proprietors can all file Chapter 7, the implications for the owner and the ability to discharge debts will vary. Individuals’ assets might remain on the table, so it is important to consult with an attorney to understand the full ramifications.
Restructuring a Business Under Chapter 11
Some businesses might be able to recover from their financial trouble, and in those cases, filing Chapter 11 might be the best choice. Chapter 11 involves restructuring the business and repaying certain debts over a set period. The business may be able to break certain leases and contracts as a part of the bankruptcy, which can also help the company become profitable once again. A court-appointed trustee will monitor the continuing business, and the creditors get to weigh in on the repayment plans. The court can approve the plan if the judge believes that it is fair. Chapter 11 bankruptcies involve a long and complicated process, and sometimes the efforts still fail to provide relief.
Chapter 13 for Businesses
Chapter 13 bankruptcies are only an option for individuals and not for businesses. However, some small business owners operate as sole proprietors, which means that as a person, they are not legally distinguishable from the business entity. These individuals might benefit from filing Chapter 13 rather than the other listed types of bankruptcies.
Under Chapter 13, a person will create repayment schedules and pay back many of their debts over a period stretching from three to five years. The court must approve the repayment plan by determining that it is fair and that the debtor will have the ability to make the required payments. There are advantages to filing for Chapter 13 because it provides certain protections for a person’s assets and sometimes allows them to catch up on overdue mortgage or car payments while still holding onto those assets. Chapter 13 also helps if the person has secured debts that are adding to their financial distress but that they cannot discharge in a Chapter 7 bankruptcy.
While Chapter 13 is generally an option for individuals, many sole proprietors have personal and business assets that are inextricably tied. For those people, Chapter 13 might be the best option. Of course, in any of these cases, the business owner needs to speak to an experienced Jacksonville attorney who can help them understand their rights and legal options.
Bankruptcy and Closing a Business
As mentioned, Chapter 7 bankruptcies typically make sense when the person plans to close the business. Some business owners want to pursue a different chapter because they believe that their business can bounce back. This same mentality often leads business owners to take out loans to get their business back in action. Anyone in these situations must view their business and its viability realistically. Restructuring does not magically fix a business, so the owner still must have a plan for generating revenue. That plan might also involve additional costs such as new marketing that the owner should calculate, because this might impact the ability to continue in business while following any proposed restructuring plan.
Sometimes closing a business will not require a bankruptcy, and the owner might be able to negotiate with creditors without filing. An attorney can also help with these negotiations and let a business owner understand whether this path is feasible in their circumstances. While shutting down a small business can seem like a devastating experience, it does not prevent you from starting a new company. Many entrepreneurs find that while their plan did not work as they intended, they learned from it and are ready to tackle a new idea.
Hiring a Jacksonville Business Bankruptcy Attorney Can Help
Deciding to file for bankruptcy can be emotional and frightening. While you might not want to file, these laws and protections exist for a reason, and they can prove helpful for many people and businesses. Sometimes bankruptcy is the smartest move you can make, but before starting that process, you need to consult with an experienced Jacksonville business bankruptcy lawyer. Call the Law Office of Carol M. Galloway today at 904-694-5489 to learn how we can help.