Now is not an easy time to run a business. The pandemic has badly hurt small businesses across America, and many have understandably fallen behind on their debts as a result. Fortunately, Chapter 11 bankruptcy creates a mechanism that businesses can use to restructure and establish a payment plan while they continue to operate.

WHAT IS CHAPTER 11?

Chapter 11 is a bankruptcy proceeding that allows a business to establish a repayment plan for its debts without liquidating its assets and without the owner losing control of the business. Under Chapter 11, the business’s creditors are subject to an automatic stay on collections while the business establishes a repayment plan.

Any business filing for Chapter 11 in New Jersey must pay a filing fee; undergo credit counseling to develop a repayment plan; file a disclosure form listing assets, liabilities, and its business plan; and propose a repayment plan. Once the business has proposed a repayment plan, creditors are allowed to analyze it and propose their own plans.

WHAT ARE THE MAIN DIFFICULTIES IN A CHAPTER 11 BANKRUPTCY?

First, the business’s disclosure statement must be accurate. The disclosure statement must describe the nature of the business as well as include a detailed financial analysis of assets, liabilities, the potential effects of liquidation, and the possibility of repaying debts under a payment plan. A proceeding can be dismissed if the disclosure is inadequate, so it’s important to have an experienced attorney help you prepare it.

Second, the repayment plan must be feasible, proposed in good faith, and be in accordance with the bankruptcy code. Feasibility means the business must be able to make the payments. Good faith means the plan can’t rely on illegal activity. Finally, the plan must pay creditors back fully before equity holders receive anything. The plan must also show that the creditors will receive at least as much as they would if the business were liquidated, and at least one creditor who will receive less than fully owed must approve the plan.

If you’re considering Chapter 11 bankruptcy for your business, contact Rosenblum Law for a free consultation today. Our experienced attorneys can help you decide if Chapter 11 is the best option for you, and if it is, they can make sure the process goes as smoothly as possible, so that you can get your life back on track.

New Jersey has one of the highest costs of living in the country, and that cost keeps going up. Even in normal times, it can be hard to keep up with your expenses. And now, with millions out of work, it’s no surprise that so many people are drowning in debt. Fortunately, the law provides a way to clear debts and get a fresh start: bankruptcy. If you’re thinking of declaring bankruptcy, you should talk to an attorney to go over your options and determine what the best way forward is for you.

What is bankruptcy?

Bankruptcy is a legal procedure designed to give individuals, married couples, and businesses a fresh start by allowing them to discharge their debts. The law recognizes six types of bankruptcy, called chapters, but Chapter 7 and Chapter 13 are the ones used most commonly by individuals and couples while Chapter 11 is the one most commonly used by businesses.

In a Chapter 7 bankruptcy, most of your assets are handed over to a court-appointed trustee, who then sells them and divides the proceeds among the person’s creditors. After that, your debts are wiped out. A Chapter 13 bankruptcy allows you to put together a repayment plan. Under Chapter 13, you pay any income you earn above what you need to support yourself and your family toward your creditors for 3-5 years, and then your debts are discharged. This option lets you keep your property.

Chapter 11 is similar to Chapter 13, but it’s normally used by businesses instead of individuals or couples.

What are the pros and cons of bankruptcy?

Bankruptcy can be a good option if your debts are much more than you can pay, but it has its downsides. Not everyone can file for bankruptcy; if you have enough money to pay your debts, you can’t file. If you’ve filed in the last seven years, you can’t file again. Even if you can file, bankruptcy can have a negative impact on your credit score. In some cases, you might be better off negotiating your debts with your creditors instead. Finally, some debts, like student loans and luxury purchases, can’t be discharged in bankruptcy.

If you have more debt than you can handle, contact Rosenblum Law today for a free consultation. Our experienced attorneys can advise you on whether you should file for bankruptcy or try a different strategy, and figure out how and when to file for bankruptcy if necessary. The bankruptcy code is complicated, so having a good attorney to advise you is critical to keeping as much of your income and assets as possible.

New Jersey has one of the highest costs of living in the country, and that cost keeps going up. Even in normal times, it can be hard to keep up with your expenses. And now, with millions out of work, it’s no surprise that so many people are drowning in debt. Fortunately, the law provides a way to clear debts and get a fresh start: bankruptcy. If you’re thinking of declaring bankruptcy, you should talk to an attorney to go over your options and determine what the best way forward is for you.

What is bankruptcy?

Bankruptcy is a legal procedure designed to give individuals, married couples, and businesses a fresh start by allowing them to discharge their debts. The law recognizes six types of bankruptcy, called chapters, but Chapter 7 and Chapter 13 are the ones used most commonly by individuals and couples while Chapter 11 is the one most commonly used by businesses.

In a Chapter 7 bankruptcy, most of your assets are handed over to a court-appointed trustee, who then sells them and divides the proceeds among the person’s creditors. After that, your debts are wiped out. A Chapter 13 bankruptcy allows you to put together a repayment plan. Under Chapter 13, you pay any income you earn above what you need to support yourself and your family toward your creditors for 3-5 years, and then your debts are discharged. This option lets you keep your property.

Chapter 11 is similar to Chapter 13, but it’s normally used by businesses instead of individuals or couples.

What are the pros and cons of bankruptcy?

Bankruptcy can be a good option if your debts are much more than you can pay, but it has its downsides. Not everyone can file for bankruptcy; if you have enough money to pay your debts, you can’t file. If you’ve filed in the last seven years, you can’t file again. Even if you can file, bankruptcy can have a negative impact on your credit score. In some cases, you might be better off negotiating your debts with your creditors instead. Finally, some debts, like student loans and luxury purchases, can’t be discharged in bankruptcy.

Downsides of filing for bankruptcy

• Can’t file if you have enough to pay
• Can’t file twice in seven years
• Bankruptcy hurts your credit score
• Some debts can’t be discharged

What should I do if I have more debt than I can handle?

If you have more debt than you can handle, contact Rosenblum Law today for a free consultation. Our experienced attorneys can advise you on whether you should file for bankruptcy or try a different strategy, and figure out how and when to file for bankruptcy if necessary. The bankruptcy code is complicated, so having a good attorney to advise you is critical to keeping as much of your income and assets as possible.