Submit Articles A Collection of Informative and Interesting Articles  
 
HOME WANT AN ACCOUNT? SUBMIT ARTICLES TOP AUTHORS Debt Collections (Advt.)
 

Bankruptcy 2010 - Can My Business Be Saved?

BY: Paul Molinaro | Category: Finance | Submitted: 2010-03-02 22:02:32
       No Photo
Article Summary: "Wonder if bankruptcy will save your small businesses? The Law Offices of Fransen & Molinaro offer some education. DISCLAIMER: This article is for general informational and educational purposes only. Nothing here is legal advice. If legal advice is required, consult an attorney..."


Share with Facebook Share with Linkedin Share with Twitter Share with Pinterest Email this article




Many of us hoped that 2010 would start an economic turnaround that would enable individuals and businesses to keep their heads above water and avoid bankruptcy. While some pockets of the economy show signs of modest improvement, much of Southern California's economic base has not responded well to the "economic stimulus." Many small businesses and self-employed persons, have, or are considering, simply throwing in the towel. Is there an alternative to closing the doors or letting everything go? Absolutely!

When we hear the word "bankruptcy," the immediate picture that comes to mind is that of a Chapter 7 liquidation which ends the business. If the business has a chance of survival, Chapters 11 or 13 may be the more appropriate way to save the business. When large corporations suffer financial losses, Chapter 11 provides a method of restructuring their debt and allowing them to stay in business. However you don't have to be GM or Pacific Gas & Electric to file Chapter 11. Small businesses, corporations, partnerships, sole proprietorships, and individual professionals may file Chapter 11, remain in business, and avoid liquidation. There are provisions in the law for a "Small Business Chapter 11," to speed the process and make it less costly.

A Chapter 11 is based on a new business plan that you formulate. Under Chapter 11, the debtor may seek an adjustment of debts by reducing the debt, by extending the time for repayment, or seeking a more comprehensive reorganization. There is no debt limit in a Chapter 11. The only real requirement is that there is some hope of reorganization.

Chapter 13 is also a debt repayment plan. In contrast to a Chapter 11 plan, the 13 plan is very simple and more structured. Chapter 13 eligibility is limited by a debt ceiling but many small businesses qualify (if not, the small business 11 may be appropriate). Most people think only an individual can file a Chapter 13. While partnerships and corporations cannot file a Chapter 13, sole proprietorships or individual professionals may be eligible for relief under Chapter 13.

One important advantage of Chapter 13 is that the plan can include a home mortgage and provide individual debtors with an opportunity to save their homes from foreclosure. Chapter 13 plans allow time to "catch up" on past due payments to the 1st mortgagor, and, in some cases, "lien strip" a junior trust deed. A "lien strip" can treat a junior lien on real property as unsecured for purposes of the Chapter 13 plan. In some cases, when the plan is completed and a discharge entered, the junior lien is completely extinguished.

If reorganization is not possible, Chapter 7 can provide relief and protection for business's owners. To qualify for Chapter 7 relief, the debtor may be an individual, a partnership, or a corporation or other business entity. Under Chapter 7, there is no limit to the amount of debt and no consideration of whether the debtor is solvent or insolvent. In 2005, Congress passed legislation making qualification for Chapter 7 more difficult by requiring the use of a "Means Test" which used gross income as a limiting factor. Fortunately, if your debt is primarily business debt, the income limits may not apply.

Bankruptcy law in 2010 is more complicated than ever, but with highly skilled counsel guiding the process, you and your business can survive this unprecedented downturn. While successful Chapter 7 and 13 bankruptcies require modest experience, a successful Chapter 11 filing is complicated and is nearly impossible without years of experience. The final message here is that there is help for struggling businesses.

About Author / Additional Info:
The Law Offices of Fransen & Molinaro, LLP enjoys focusing on the fields of Bankruptcy (simple to complex, individual or corporate, Chapters 7, 11, and 13) and Real Estate Law.

Comments on this article: (0 comments so far)

Comment Comment By Comment Date

Leave a Comment   |   Article Views: 2524


Additional Articles:
•   The Effortless Purpose of an Apple Seed

•   Encouraging the Talent

•   How to Build Grate Career From School to College Education?

•   Islamic Art and Culture


Latest Articles in "Finance" category:
•   DEMYSTIFYING THE ONTOLOGY OF TAXATION RULINGS IN THE GAMBIA: PART III

•   DEMYSTIFYING THE ONTOLOGY OF TAXATION RULINGS IN THE GAMBIA

•   Why is Wheeler Insurance Renewal Important and Beneficial?

•   Turn Your Skills Into MONEY

•   I'm Giving You a Raise

•   Public Sector: A Pride to Say Or a Price to Pay....

•   Internet as a Source of Income



Important Disclaimer: All articles on this website are for general information only and is not a professional or experts advice. We do not own any responsibility for correctness or authenticity of the information presented in this article, or any loss or injury resulting from it. We do not endorse these articles, we are neither affiliated with the authors of these articles nor responsible for their content. Please see our disclaimer section for complete terms.
Page copy protected against web site content infringement by Copyscape
Copyright © 2010 saching.com - Do not copy articles from this website.
| Home | Disclaimer | Xhtml |