Some people don’t really understand what bankruptcy means. They may even view it as a failure. But what bankruptcy actually does is wipe the slate clean so an individual can start over again. Understanding how North Carolina business owners can benefit from bankruptcy is a good thing. Essentially, it’s a chance to reorganize some things and try again.
The nuts and bolts of Chapter 11
Chapter 11 bankruptcy takes the assets of the business or person into account. During the process, payment plans are made. Things are organized. Many creditors will get something, if not everything, they are owed by the debtor. In Chapter 11, the person or organization has more control over their assets than in a Chapter 13 bankruptcy.
Who files and why
Chapter 11 bankruptcy is mostly utilized by high net worth individuals and businesses. Most consumers file for bankruptcy under either Chapter 7 or Chapter 13. An organization may file for bankruptcy by itself, or it may be forced into that option by creditors. To file for bankruptcy, the petitioner must pay court fees.
The bankrupt party must also make a disclosure to the court outlining their current financial situation, and how they plan to move forward. This must be approved by the court before it’s implemented. Creditors are also allowed to vote on whether or not to accept the reorganization plan. They may be unhappy with the repayment amount allocated to them.
It’s very important to have open, honest conversations with your lawyer and financial advisor during a bankruptcy proceeding. They may be able to help you make a better plan and get through the process more quickly.