It can be tempting to try and handle your business’s financial troubles on your own. However, filing for bankruptcy is a complicated process that requires professional expertise. Before taking this step, we recommend speaking with an experienced bankruptcy attorney who knows the ins and outs of what you’re dealing with.
- Know The Type of Bankruptcy To File For
If you’re filing for bankruptcy, it’s essential to know the type of bankruptcy that will work best for your situation. There are six chapters in the Bankruptcy Code: Chapter 7, Chapter 11, Chapter 12, Chapter 13, Chapter 9, and Chapter 15.
Chapter 7 is a liquidation proceeding in which debts are canceled after a creditor has been paid a percentage of their claim. The remainder goes to unsecured creditors who have not been paid out. They may get nothing if no money is left over after secured debts have been paid off.
In a Chapter 7 bankruptcy, most of your debts are canceled. But some debts can’t be discharged in this type of bankruptcy. They include student loans, child support, alimony payments, debts resulting from fraud or embezzlement, and fines owed because of criminal convictions. If you own property worth more than $521,000, including your primary residence, it can’t be protected in Chapter 7 either.
- Go Through Credit Counseling
Credit counseling is the first step in a bankruptcy filing. You must attend at least one credit counseling session before your business can file for Chapter 7 or Chapter 13 bankruptcy protection. This meeting aims to explain the consequences, benefits, and risks of your business filing for bankruptcy protection.
You will be asked about your income, expenses, and debt load during this initial meeting. A credit counselor will evaluate whether you qualify for a Chapter 7 or 13 filing based on your current financial situation. They may also advise on reducing their debts before filing for Chapter 11 if needed. Many people choose not to file because they believe it’s too expensive when they could do it themselves with proper planning.
- Gather All Business Financial Information
If you are looking to file for Chapter 11 bankruptcy, one of the first things you should do is gather your business’ financial information. This includes all tax returns and financial statements. You may also have other types of documents that could help with your cases, such as invoices, purchase orders, contracts, and leases. The more documentation you can provide to support your case, especially if multiple creditors are involved in the process, the more likely the courts will grant an extension or reorganization order.
- Stop Using Your Credit Card
Before you file for bankruptcy, stop using your credit card. Don’t use it to make business purchases, pay bills or pay for personal expenses. You need to show that you’re serious about getting rid of debt before the court will consider approving your case.
If you have any questions about how to stop using a credit card or what else you can do before filing for bankruptcy, contact an attorney today.
You may be able to keep a credit card after filing for bankruptcy, but it’s not recommended. If you have any questions about how to stop using a credit card or what else you can do before filing for bankruptcy, contact an attorney today.
- Hire an Experienced Attorney
If you are considering filing for bankruptcy, it is important to consult with an experienced attorney. The right NJ bankruptcy lawyer can help you avoid common mistakes and get the best outcome in your case. An experienced bankruptcy attorney knows how to negotiate with creditors on your behalf and file a claim that will ensure the best possible outcome.
The benefit of hiring an experienced attorney is that they have handled this type of situation many times before, so they know what questions to ask and what steps need to be taken to succeed in your particular case.
Conclusion
Bankruptcy is a big decision, and it can be an overwhelming process. Before you take any steps to file for bankruptcy, you should know the facts and weigh your options carefully. Suppose you’re considering filing for personal bankruptcy or business bankruptcy. In that case, we encourage you to consult with an attorney who can provide accurate advice about your situation’s best course of action.
