Business and Corporate Bankruptcy in Massachusetts
Are you a Massachusetts business owner considering bankruptcy? Bankruptcy can be an intimidating and confusing process, but there are options to consider that may help you protect your assets, manage debt, and keep your business running. Under the Bankruptcy Code, companies can file bankruptcy under Chapter 11 or Chapter 7. Chapter 11 bankruptcy is the chapter for “reorganization,” while Chapter 7 is for “liquidation.”
The key to determining which chapter is right for you is to consider whether your business is worth saving. Is the Company more valuable alive or dead? If the answer is yes, reorganization through Chapter 11 may be the best option. It can allow debts to be reduced or restructured so that a business is possible again. On the other hand, Chapter 7 liquidation may be the best choice if the business has little value.
When considering bankruptcy, you must also consider its effect on the business owner. Sometimes, a “business” bankruptcy is actually a personal bankruptcy of the business owner due to business debt, and the rules for “business-personal” bankruptcy are less strict than those for straight consumer bankruptcies. This includes income issues, like the “means test,” which is not applicable in Chapter 7 cases involving primarily business debts.
At First Call Bankruptcy, we are here to help you make the smartest and best decisions for your MA business, whether it be reorganizing through Chapter 11 or liquidating through Chapter 7. We are skilled in working out business debt negotiations and workouts while avoiding bankruptcy. Contact our local Massachusetts attorneys near you today for a free consultation, and let us help you get out of debt and back on your feet.
Planning well in advance when closing down a failing company is essential. Before speaking with a bankruptcy attorney, please do not do anything drastic such as transferring assets out of the ordinary course. If these transfers are done incorrectly, there can be severe consequences.
Filing for Bankruptcy: Information, Benefits, and Disadvantages
Filing for bankruptcy can be a financially prudent decision, but it’s important to understand all the benefits and disadvantages before taking the plunge. There are six types of bankruptcy outlined in the U.S. bankruptcy code, each of which applies to different debt situations. The primary benefit of declaring bankruptcy is that debt collectors can no longer contact the debtor about owed funds. Additionally, some assets may be liquidated to pay off debts and the debtor may be able to repay a portion of their debt without collectors hassling them.
What Are the Disadvantages of Filing Chapter 11?
The Federal Rules of Bankruptcy Procedure and the rules of local bankruptcy courts govern the process, which the U.S. Bankruptcy Court oversees. However, filing for bankruptcy has its disadvantages. It can ruin your personal or business credit for up to 10 years, and you may lose some or all of your property if it isn’t exempt. You may also be restricted from taking on a management role with a limited liability company, and the process can cost hundreds or thousands of dollars in legal and court fees. Moreover, the emotional toll of bankruptcy and the problems leading up to the filing can be immense. If you’re considering filing for bankruptcy, it’s essential to weigh the benefits and disadvantages before making a decision.