Chapter 11 bankruptcy in Miami
What is chapter 11 bankruptcy?
Chapter 11 bankruptcy is used primarily to reorganize businesses with heavy debt burdens generally linked to corporations; nonetheless, these services are available to small businesses as well. Consumers can also file for Chapter 11 but this will rarely occur. Chapter 11 lets the debtor have a post-bankruptcy financial plan for profitability. This plan will include ways in which the debtor seeks new sources of income or revenue while also holding the creditors. A Gallardo Law Firm attorney can show you how to file chapter 11 and help you throughout the whole process of Chapter 11 bankruptcy in Miami
Small business bankruptcy under Chapter 11
Small businesses, that are 500 employees or less, are among the majority of chapter 11 filings. Many times these bankruptcies are dismissed and transferred to Chapter 7. This happens because courts don’t see a way for this business to become profitable. The business will have to be able to survive and profit on its own in order to file. The amount of debt of a small business will have to total $2.19 million or less when the petition is filled. Chapter 11 bankruptcy in Miami allows small businesses the benefit of additional time to file a plan and negotiate the terms with creditors. However, it can be very costly and become a burden for small businesses already struggling financially.
Chapter 11 bankruptcy for individuals
Although Chapter 11 bankruptcy was initially intended for businesses, since 1991 the U.S. Supreme Court held that individuals can also file for Chapter 11. It’s very rare for individuals to file for Chapter 11 bankruptcy but possible, especially those individuals who still have considerable personal earning potential and their debts exceed the restrictions established by Chapter 13 and Chapter 7. A common example of a chapter 11 bankruptcy individual is a celebrity who made really bad investments yet still has earning potential through other sources. To study your bankruptcy options, contact a bankruptcy attorney form Gallardo law Firm.
Chapter 11 bankruptcy process
The debtor and the creditor can both file for Chapter 11 bankruptcy in Miami. The petition is first filled with the U.S. Bankruptcy Court in order for the case to begin. From thereon creditors cannot pursue current or new collections actions for unpaid debts unless a modification to the say is issued by the court. This is a great opportunity for the debtor to draw a plan and discuss more viable repayment terms without having to worry about existing debts. Once the petition has been filed, the business or individual can continue about its affairs without any interruptions. In the meantime, under the bankruptcy court supervision, the debtor will find out a good repayment plan. This bankruptcy type is generally lower than the debt totals. All throughout the case the debtor can evaluate the creditor’s claims and make objections accordingly. The court is kept informed through the operating reports filed by the debtor. To find out more about bankruptcy laws chapter 11 in the state of Florida, contact a chapter 11 bankruptcy lawyer from Gallardo Law Firm.
Chapter 11 plan of reorganization
The purpose of filing Chapter 11 bankruptcy protection instead of Chapter 7 is to become profitable. In order to reach this goal, the debtors renegotiate the leases and contracts and debts are either discharged or partially repaid. Creditors generally like to negotiate under chapter 11 personal bankruptcy or business bankruptcy chapter 11 since Chapter 7 doesn’t provide them with better terms. The chapter 11 plan of reorganization places creditors in different classes depending on how their claims are handled. Creditors with first precedence for repayment include federal and state tax agencies, stockholder interests and employees owed wages. Secured creditors are placed in their own class and insecure claims in another. The amounts of debts and the terms for repayment are modified under the plan. Creditors vote for chapter 11 reorganization plans and the court approves it.
Confirmation of the Chapter 11 Reorganization Plan
As long as the bankruptcy reorganization is reasonable and done in good faith, and complying with the law, the court will usually confirm it. As soon as the plan is confirmed, any debts that occurred in the past, which is before the confirmation date, are discharged. By now the debtor repays creditors according to the particular agreements and work in agreement with the reorganization’s plan terms. Find out more about chapter 11 bankruptcy laws at Gallardo Law Firm. A business bankruptcy attorney will clear the way for you.
Difference between chapter 7 and chapter 11 bankruptcy in Miami
Chapter 7 or liquidation bankruptcy is when firms are already past the reorganization period and need to sell off un-exempt assets in order to pay creditors. Chapter 7 allows creditor’s to collect their assets in order to pay creditors, and the money is collected depending on how the money was borrowed by the firm. A trustee is also appointed in order to ensure that secured assets are sold and profits are used to pay creditors.
Chapter 11 bankruptcy or rehabilitation bankruptcy is more involved since it gives the firm a chance to reorganize all debts and try to come back as a better business. In order to accomplish this, the firm will contact its creditors to try to modify the terms on loans which may include the dollar value of payments and interest rate. Chapter 11 requires a trustee as well but in this case the trustee supervises the debtor’s assets and allows for business to continue. The debt is not absolved but only the terms of the debt are changed. This allows the firm to pay everything back as they earn.
Why is not convenient to file bankruptcy without a lawyer?
Some situations will require hiring a bankruptcy attorney in order to represent you in bankruptcy. Bankruptcies are a lot of paperwork. The chapter 11 bankruptcy lawyer can help you with the paperwork and work diligently to lessen the amount of loss you experience. He or she can also help restructure your business.
If your business is struggling financially, don’t carry this heavy burden on your shoulders alone. Choose the legal counsel of a Gallardo law Firm attorney.
Gallardo Law Firm and the bankruptcy attorney Miami
Gallardo Law Firm has helped countless of individuals and business in Miami and surrounding areas to meet their bankruptcy needs. Filing chapter 11 bankruptcy with one of our experienced bankruptcy lawyers can be the best decision you ever made as it will clear the horizons that lead to a healthier and more stable financial future. We treat our clients like family. Our work in the community extends beyond our legal counsel and it sets the stage for a long term firm-client relationship.