Chapter 11 bankruptcy can help a business in two ways: by reordering and/or reorganizing it so that the business owner gets a chance to keep their company. It may be used to clear a business of some of its debts or contracts, but it cannot create revenue again for the business or guarantee that it will continue functioning.
Choosing Chapter 11
Bankruptcy is one of the options open to businesses when their debt rises out of control and they are no longer able to repay. These debts are not immediately exempted, as is the misconception at times, but reorganized so that a business can consolidate its payments in a scheduled and planned manner. Bankruptcy is discharged in such a way that debtors can regain their money or some of it, while the business is saved from becoming dissolved.
In Chapter 11, the business can work out a plan with creditors and stakeholders, negotiating payouts such that the company is not destroyed.
Filing For Chapter 11 Bankruptcy in Massachusetts: The Actual Process
Individuals wishing to file for bankruptcy need to undergo credit counseling. Once it is determined that bankruptcy is the right option, the process can move ahead.
- What Type of Bankruptcy Is Right?
A Means Test helps determine the kind of bankruptcy that needs to be filed under. The test involves a comparison of the salary earned in the past 6 months by the individual filing for a Chapter 11 bankruptcy with the salary earned by other comparable individuals in Massachusetts. If the applicant’s salary falls below the median, they may file.
Gathering Required Documents
Documents needed to file a Chapter 11 bankruptcy in Massachusetts include the applicant’s list of debts, including loans, property deeds, documents of any major financial transactions, tax returns for the past 2 years, inventory or list of possessions, etc.
Submitting A Repayment Schedule
Documents as listed above and forms filled as per court requirements are then submitted together with a repayment schedule or plan. This plan will contain details on how the creditors will get back their money. The repayment schedule is submitted to the court for an assessment.
Waiting For The Decision
The court will decide to issue a stay order for the business, preventing creditors from contacting debtors, putting a stop to foreclosure. Any non-exempt assets will then be utilized for paying off creditors by the trustee.
When You File For Chapter 11 Bankruptcy
Need help with filing, or know someone who might? Reach out for a professional bankruptcy attorney . Chapter 11 allows the business owner to keep the business and run it, or a trustee may be appointed. Ideally, reach out to a professional who understands Chapter 11 bankruptcy. Details such as motions to use cash collateral and financing as a debtor in possession, paying some of the creditors, monthly reports on the business operations, etc. need to be understood and responsibilities and duties carried out to ensure a successful outcome. These are technical procedures that, if not carried out correctly, can undo all the hard work you put into the filing.
There are Massachusetts-only exemptions which an individual may be unaware of, but which would be well-known to a professional and which can help the business filing for Chapter 11 bankruptcy.
More petitions for bankruptcy are denied than accepted. When you work with a professional such as a bankruptcy lawyer or attorney, you stand a better chance of your claim being correct in all respects, and thus winning acceptance.
About Us
Legal Rights Advocates, PLLC is a law firm that helps clients file for bankruptcy in Massachusetts . Our team of attorneys, over the years, has helped countless clients understand bankruptcy better and file after looking at other options and choosing the one that suits them the best.
If you are interested in learning more about how to file for bankruptcy, including Chapter 11, in Massachusetts, call us at (855) 254-7841 for immediate assistance.
(855) 254-7841
(855) 254-7841
