A debtor considering bankruptcy must bear in mind that a bankruptcy stays on his or her credit report for up to 10 years, which can potentially make it difficult to get future credit. A debtor should also keep in mind that some debts must still be paid even if he or she files for bankruptcy. Accordingly, it is essential to contact an experienced bankruptcy attorney before making potentially life-altering financial decisions.
Learn More About Bankruptcy
If you are struggling with high debt, bankruptcy can be an effective means of getting that burden off your shoulders. At the Law Office of Mark A. Skelton, we help people get out of debt and stop harsh creditor actions by assisting them in filing for Chapter 7 and Chapter 13 bankruptcy relief. We serve clients from throughout the East Tennessee region. We offer excellent client service and personal, hands-on attention from a highly qualified bankruptcy attorney.
To learn more about bankruptcy, please review the information provided below or visit our bankruptcy practice area page.
To schedule your free initial consultation at our Rogersville, Tennessee, office with an experienced bankruptcy lawyer, contact us today online or by telephone at 888-899-5564. Allow us to discuss your circumstances and advise you of your available options for financial relief.
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Are you getting tired of creditor harassment? Are you being threatened with wage garnishment, foreclosure, repossession and other actions? Bankruptcy can put all of that to an end.
Filing for Chapter 7 or Chapter 13 bankruptcy can stop your creditors and allow you a fresh financial start. A knowledgeable bankruptcy attorney can help you achieve total debt relief.
Like a consumer, a business sometimes finds itself in the uncomfortable position of being unable to pay its debts. One solution is to file for bankruptcy, a legal process in federal bankruptcy court that releases the business from the obligation to pay all or some of its debts. Contact The Law Office of Mark A. Skelton in Rogersville, Tennessee, to schedule a consultation with an attorney who is experienced in advising business owners about whether bankruptcy is right for them.
Bankruptcy choices for small businesses
Businesses must choose among alternative types of bankruptcies, each of which corresponds to a different chapter of the federal Bankruptcy Code. Businesses usually choose either Chapter 7 or Chapter 11, but Chapter 13 is also sometimes an option. Sometimes businesses can be involuntarily drawn into bankruptcy by their creditors, who face stiff financial penalties if they initiate an involuntary bankruptcy against a company for invalid or improper reasons.
Chapter 7 bankruptcy
Chapter 7 bankruptcies are called “liquidation bankruptcies.” Chapter 7 is usually employed by consumer debtors, but can also be used by businesses that want to liquidate their assets to be relieved of debt. A Chapter 7 bankruptcy is commenced when the business files a petition with the bankruptcy court. The court then orders an automatic stay of debt collection activities against the business and its property. A court-appointed bankruptcy trustee manages the details of the bankruptcy, selling business assets to satisfy as many of the business’s debts as possible. At the conclusion of the proceeding, remaining debts of the business are not necessarily discharged as with an individual debtor, but generally, the business ceases to exist because its assets are gone and it is no longer profitable.
Chapter 11 bankruptcy
In Chapter 11 reorganization bankruptcies, the commercial debtor is usually allowed to stay in business throughout the bankruptcy proceedings. A business debtor may only operate independently in its ordinary course; transactions outside the ordinary course of business will require approval from the bankruptcy trustee and the court.
A Chapter 11 proceeding, is also initiated by filing a petition, but a trustee is not automatically appointed. Although the bankruptcy judge may decide to appoint a trustee in a Chapter 11 case, it is the exception rather than the rule. As in Chapter 7, however, the filing of the bankruptcy petition stops creditors from attempting to collect their debts through an automatic stay.
As part of a Chapter 11 bankruptcy, the debtor business files a proposed plan of reorganization. The plan of reorganization sets forth in detail how the debtor intends to conduct its business, while still continuing to make payments to its creditors. In some situations, creditors may also propose plans of reorganization.
Chapter 11 bankruptcies divide creditors into classes, each of which has varying rights depending upon the types of debt they hold. The approval process for a reorganization plan involves negotiation and input from creditors, and the finalized plan must be approved by the court. In some cases, the court will approve the plan even though not all of the creditors did. If no plan is approved, however, the bankruptcy could be converted to a Chapter 7 liquidation or may be dismissed altogether.
The choice between Chapter 7 and Chapter 11 is not necessarily binding, as a bankruptcy case could be voluntarily converted after filing in some circumstances.
Speak to a bankruptcy lawyer
Bankruptcy may not be right for every business struggling with debt, but sometimes it is the best choice a business owner can make. Alternatives to bankruptcy include working informally with creditors toward a repayment plan or assigning assets for the benefit of creditors, and these should be considered before a bankruptcy filing. Contact The Law Office of Mark A. Skelton in Rogersville, Tennessee, to schedule a consultation with a lawyer experienced in bankruptcy law to see if it is right for your business.
DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.