There are many entrepreneurs that would consider filing for bankruptcy relief the failure of their business. Fortunately, a Chapter 11 bankruptcy offers a number of advantages to struggling business owners which can help them keep their business, get back on their feet, and move forward. Our Los Angeles debt relief team outlines some of the ways businesses can benefit from filing for bankruptcy below.
Reducing and Eliminating Debt
One of the primary goals of filing for bankruptcy is the reduction or elimination of debt. Chapter 11 bankruptcy gives businesses many options in dealing with debt Here are some types of debts that most commonly plague business owners:
- Tax Debts: Past-due taxes incurred by the business fall into two categories-priority and non-priority tax.
- A business owner is allowed 5 years from filing for bankruptcy relief to repay priority taxes, providing an affordable repayment plan. Priority taxes include payroll and recently incurred (basically within the last 3 years) income taxes.
- Nearly all other taxes are non-priority taxes and can be dramatically reduced or completely eliminated.
- Unsecured Debts: These debts are your accounts payable and usually court judgments. They include vendor debt, unsecured bank loans, and many judgments and taxes. These debts are often paid pennies on the dollar in bankruptcy and allow you to give your business a fresh start with a very manageable debt load.
- Secured Debts: These are debts that have collateral behind them. These can be debts on real estate, accounts receivable and inventory, work vehicles, and other equipment used for work. With a Chapter 11 bankruptcy, you can reduce the loan balance to the value of the collateral and the associated payments as well. This reduces your monthly payments immediately.
Keeping Doors Open
One of the biggest, and most notable, features of filing for bankruptcy as a business is the freezing of all collection and legal processes against you. You are also given the ability to start and completely finish the process without closing your business down. The goal is to restructure your current payment obligations to make them more affordable and get the time you need to modify your operations, all while being given the opportunity to make a profit during the process.
Contact Our California Bankruptcy Team Today
If you would like to learn more about the specifics of how a Chapter 11 bankruptcy works, take a look at our in-depth blog here! At Weintraub Zolkin Talerico & Selth, we are committed to helping business owners find creative and effective solutions to their debt problems, and get them the financial independence they deserve.
If you would like to find out more about how we can help your business get rid of debt, get in touch with us today through our website or give us a call at (310) 220-4147 to schedule a consultation.