How Filing Chapter 11 May Affect Your Personal Finances

If you have a business in Dallas, Texas and are facing major financial problems, then you might have the option for filing for bankruptcy under Chapter 11. This bankruptcy is also known as “Business Reorganization”.

Chapter 11 can also be filed by individuals - but is not normally preferred due to the complexity of the entire process. It can be filed by a sole proprietary firm, a partnership firm, a Limited Liability Company or even a small or large corporation.

How to File For Bankruptcy Under Chapter 11

You will have to file a petition under Chapter 11 in your local bankruptcy court with the help of your bankruptcy attorney. You will also need to provide details of your outstanding debts, your present assets, liabilities and expenses and also any ongoing lawsuits or any potential ones.

You will then need to submit a repayment plan to the court - and that plan will be shown to your creditors who will decide on whether to accept or reject your proposal.

However, once you have filed for bankruptcy under Chapter 11, your creditors will not be allowed to harass you in order to collect their outstanding debt. It might be six months to a year before your repayment plan can be put into action; and normally, you will have to pay off all your secured debts and taxes (with interest).

You will also be required to pay at least some part of your unsecured debts.

In order to do this, you might be given a period of 6 six years to clear your outstanding debts. One advantage of filing under Chapter 11 is that you can still continue running your business.

This opportunity can give you some time to reorganize your finances without sacrificing your business. So, if you feel that your business still has good potential, then you can file for bankruptcy protection under Chapter 11.

How Can This Affect Your Personal Finances?

The problem with filing for bankruptcy under Chapter 11 is that it is a long and tedious process, requiring the services of an experienced and expert bankruptcy attorney. The time taken by the courts to settle such matters is also quite long.

Your creditors get to vote either for or against your reorganization plan - and there could be many hits and misses until your bankruptcy attorney can work out an amicable solution with them. There could be many hearings involved before a plan is approved - and this could take up a lot of time and effort on your part.

Some of your assets will also need to be disposed of in order to satisfy your creditors. A lot will also depend on other factors, such as your personal financial position and the mindsets of your creditors.

The time and expense of a failing business also has the potential to impact your personal financial life – leading to you being unable to meet those obligations.

So, even though you might get some breathing space until your creditors review and vote on your re-organization proposal, you will still need to pay off your outstanding debts over a long period of time along with interest.

If your business is in trouble and you have decided to file for chapter 11 protection, you should also seek the advice of an experienced personal bankruptcy attorney. You never know when your home, car or other assets will be at risk.

Topic: How Filing Chapter 11 May Affect Your Personal Finances