A business organization can also file bankruptcy just like individuals. The organization may be in a distressful financial state where filing bankruptcy in the only solution. An attorney is required to represent the organization in the federal bankruptcy court. If you’re not aware how to declare business bankruptcy, then continue reading in order to know how to file bankruptcy.
Here are a few ways to file a business bankruptcy:
1. A business organization has three options under which it can file bankruptcy like Chapter 7, 11 and 13. Chapter 7 is considered to be liquidation bankruptcy where the company’s non exempted assets are liquidated to pay off the creditors. When the owner files under Chapter 11 or 13, it provides protection to the organization against the creditors and allows the organization to repay the debt over a period of three to five years. Although chapter 13 can be used by sole proprietorship; so the company owner can file bankruptcy to save his organization from collapsing.
2. The organization owner can hire a lawyer who specializes in bankruptcy cases. The attorney can guide you to file business bankruptcy and help your organization start afresh.
3. When you hire a lawyer make sure you provide complete information about your company’s finances, income, assets and liabilities; so the lawyer can accurately fill the bankruptcy forms required during filing a petition with the court.
4. When an organization files bankruptcy it may get protection against creditors. The trustee appointed by the bankruptcy court may notify the listed debt collectors regarding bankruptcy as well as organize a meeting with them
5. After a month of filing petition with the bankruptcy court, a meeting may be organized with the creditors. During this point, the trustee appointed by the bankruptcy court may repossess your non exempted assets for liquidation. The fund can be used to pay off the creditors; thereby once the organization discharge its debt then it can start afresh.
Can A Business Organization File Bankruptcy?