Business owners may choose from several bankruptcy opportunities to determine if a repayment structure or liquidation is right for them. Chapter 7 and 11 offer these opportunities, and business bankruptcy lawyers help these business owners make this decision properly.
Reviewing Chapter 11
Chapter 11 is similar to chapter 13; however, chapter 13 isn’t available for all business owners. The difference between these options is that eligibility for chapter 13 requires a set income level, while the state of Missouri doesn’t require consumers to possess any designated income level for chapter 11.
Chapter 11 is a restructured payment opportunity that the business owner uses to settle their debts. However, the plan is created to allow them to maintain enough capital to operate their business.
What Are the Major Differences Between Chapter 7 and 11?
Chapter 7 isn’t a repayment plan, it is a liquidation of the business property and assets. The business owner doesn’t have any protection from the court in chapter 7, and the court chooses what properties are sold. This could include key assets needed to operate the business. Additionally, during liquidation, they must shut down the business.
Alternately, chapter 11 gives them protection for their business property since it doesn’t require them to sell any important properties. The attorney helps the business owner create a plan that helps them settle debts without major restrictions.
How to Qualify for Chapter 11
To qualify for chapter 11, the owner doesn’t need a specific income; however, a maximum debt limit of $2,490,925 is imposed. Companies that have a debt value beyond this maximum cannot file for chapter 11. The attorney must calculate a total value for these debts for the court, and after an evaluation, the court renders a decision about eligibility.
Business owners find a debt relief solution through chapter 11 and 7. The business type could affect their eligibility. Typically, large corporations choose chapter 7 since they have excessively high debt values, while small business owners and self-proprietors choose chapter 11 most often. Owners who need help should contact business bankruptcy lawyers by visiting Stlbankruptcyfirm.com today.
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