In today’s challenging economy, many businesses in Orlando find themselves struggling with debt with no way to pay it off. In such a case, filing for Chapter 11 bankruptcy can save your business by allowing you a chance to reorganize your debts. This way, you will be able to continue your business and create a future plan for sustainability.
However, this second chance at success does not come without obstacles and hurdles. Filing for Chapter 11 bankruptcy can be complex, especially without professional guidance. It is important to consult a Chapter 11 business bankruptcy attorney who can make the process smoother for you. You can read this article to learn more about it.
Understanding Chapter 11 bankruptcy
Chapter 11 Bankruptcy is a legal process designed for the reorganization of one’s debts under court supervision and allowing businesses to continue operations. Here are some key things you should note about filing Chapter 11 bankruptcy:
- Once the bankruptcy is filed, all the collection activities are automatically halted by the court, allowing the business some time to reorganize its debts and finances.
- It is the debtor who remains in control of their business while developing a plan while the court provides supervision.
- The reorganization can include negotiations with creditors or liquidating assets.
- The creditors are involved in developing the plan.
It is also important to understand the differences between Chapter 11 and Chapter 13 bankruptcy.
- Chapter 13 is for individuals with regular income and has specific debt limits, which makes it unsuitable for businesses.
- Chapter 13 usually requires an appointed trustee to oversee debt repayment. On the other hand, Chapter 11 does not necessarily appoint a trustee.
- In Chapter 13, individuals are required to follow a repayment plan of three to five years. On the other hand, Chapter 11 plans are often more flexible.
Read also: Why You Need an Uber Accident Lawyer: Key Insights for Victims
Signs your business needs Chapter 11 bankruptcy
Here are some signs that your business needs and can benefit from Chapter 11 bankruptcy:
- Your business is experiencing decreased cash flow.
If your business is experiencing decreased cash flow, it is a clear sign of problems in your organization. If you do not have revenue incoming, you will not be able to meet your financial needs. Thus, Chapter 11 gives you the time you need to restructure.
- You are unable to meet your debt obligations.
If you are unable to fulfill your debt obligations, such as loans and lease payments, it is clear that you need time to figure things out. Late payments can ruin your credit score, and accumulation of debt can cause financial stress. These are clear signs that your business requires some help.
- You are not paying employees.
When a business is not able to pay employees adequately or on time, it is suffering through a financial strain. This can ruin the employer-employee relationship and lead to more turnovers. Turnovers can, in turn, cause more stress.
- You have breached debt contracts.
Debt contractors outline how you are supposed to pay your creditors, including the installments and interest. A breach of any clause can lead to severe consequences. Creditors may even file a legal case against you and demand immediate repayment.
- Creditors keep pressurizing you for money.
Finally, if you find yourself being pressured by your creditors for repayment, it is a surefire sign that you are in trouble. Getting consistent calls and demands that sound like threats is not something you want to wake up to every day. When you file for Chapter 11 bankruptcy, you can avoid this stressor effectively.
Don’t let your debt destroy your business!
If you find yourself in an ugly financial situation where creditors keep knocking on your door, and you have no way to repay them, it is time to ask for help. You cannot solve anything sitting at home, wondering what to do. Hire a bankruptcy attorney in Orlando today!
