BUSINESS BANKRUPTCY OPTIONS
Serving Kingsport, Johnson City, Bristol and Surrounding Communities including SW VA
Serving Kingsport, Johnson City, Bristol and Surrounding Communities including SW VA
With no end to the COVID-19 outbreak in sight and a series of economic impacts on the rise, the repercussions of this pandemic have yet to be seen. Small businesses are now vulnerable to supply limitations as manufacturers decrease production. When your cash flow no longer supports your business debts, your personal assets are in danger, and so is your livelihood.
Increased debt, coupled with a lack of customers and resources, is taking its toll on countless businesses right now. Soon, contractual agreements made between companies will suffer because of coronavirus. Many find that despite their best efforts, the only option is to file for bankruptcy. This choice is hard to make, but without it, businesses may face legal trouble if dues are not satisfied.
Bankruptcy is a necessary last resort when your small business is having financial trouble. Despite your best efforts, unavoidable circumstances occur every day.
Always consult an attorney before filing for bankruptcy. Our attorneys at The Pope Firm are experts in the legal proceedings of business bankruptcy filing in East Tennessee. We work with small business owners to identify the best course of action and walk you through your options.
When your business can no longer pay off its debt, bankruptcy is the legal process to take. There are different forms, including Chapter 7 and Chapter 13. Each has different characteristics based on the issue the business is facing.
The most common form of bankruptcy, Chapter 7, involves the liquidation of your business assets under the protection of the court. The court evaluates your assets, then liquidates or sells them to pay off creditors.
Our attorneys evaluate your business assets to determine your best course of action for Chapter 7. We negotiate with creditors, preventing them from harassing you. Chapter 7 bankruptcy is often the last resort for sole proprietorships and small businesses.
In some cases, your business may have a fighting chance, and reorganization, as opposed to liquidation, can help resolve your situation. With a Chapter 13 bankruptcy filing, you have at least five years to pay off your debt. Your personal assets are not affected, and your creditors receive payment based on priority.
With a reasonable payment plan, your business doesn’t have to close. To make sure your finances are overseen, the court appoints a bankruptcy trustee. If you are a sole proprietor, you can file a Chapter 13 in your name. However, some small businesses can’t file for this form of bankruptcy, depending on their circumstances.
If you hear about Chapter 11 bankruptcy on the news, it is often associated with big companies, even corporations. However, in some cases, your small business can file for Chapter 11 bankruptcy in Tennessee.
Chapter 11 provides the opportunity to restructure your business while it continues to function. It is the only option for restructuring a small business classified as an LLC, partnership, or corporation.
Chapter 11 is one of the more complicated options for bankruptcy, and the process can be lengthy. At the Pope Firm, we can help you assess whether Chapter 11 is the right option for you and your small business.
Since Chapter 11 can be more challenging, why would you choose to file it for your small business?
To file Chapter 11, you must first acquire and file all the necessary financial documents. Chapter 11 for small businesses requires more documentation than Chapter 7 or 11. Then, you will work with a lawyer or on your own to propose a plan to reorganize your business. Your creditors must approve the plan, which will be overseen by a U.S. Trustee.
Before COVID-19, a small business could not owe more than $2.7 million to file Chapter 11. In March 2020, The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed, which increased the threshold to $7.5 million.
It depends on your business, creditors, and assets. A sole proprietor with limited assets may need to liquidate and file for Chapter 7 bankruptcy. In this case, your credit card cannot support business debt for years, especially if your business is already suffering.
If your small business fell on hard times but may be able to recover in the future, you don’t need to lose your business. That’s why consulting a bankruptcy attorney is essential, especially with the economic impacts of COVID-19.
The Department of Labor is reportedly overwhelmed with applications as a result of the outbreak. If you have already filed for bankruptcy, contact The Pope Firm for the latest legal updates in bankruptcy proceedings. We are ready to answer your questions and prepare you for what comes next.
Small businesses don’t have the luxury of major assets and strong financial backing. The options you have ultimately depend on the type of business bankruptcy chapter you file for.
With Chapter 7 bankruptcy, all your business operations immediately stop, and the business no longer continues. A trustee assigned by the court starts the liquidation process. With Chapter 13, businesses and sole proprietorships have a chance to regain financial stability. Based on the likelihood of recovery, the court grants you time to pay off your debts.
We match you with a skilled attorney who is familiar with bankruptcy legalities. We’ll recommend the best chapter based on your situation and economic forecasts. Together, we’ll make the right decision and work with your creditors to ease your burden.
There are several steps you can take to avoid bankruptcy. Your business should focus on paying off debt and cutting unnecessary expenses. Do not avoid your lenders or their calls. You must keep communication open, as you might extend the time you have to pay off debts or loans.
Since COVID-19 restricts what most businesses can do during the pandemic and quarantines, speak to an attorney before filing for a business bankruptcy chapter. We specialize in negotiation, which doesn’t have to take place in court. That may allow you to restructure your business in the meantime.
No company starts with the knowledge that it will go bankrupt. The economic health of many countries is in danger because of the outbreak. Production has slowed and even halted in cities around the world. With travel restrictions and complete border lockdowns, the main priority is survival.
Thousands of people are being laid off, and companies cannot continue to pay salaries or debts without income. Essential suppliers are unable to deliver their products to their clients, and this is a growing problem with no easy solution. Our attorneys at The Pope Firm understand the frustration and stress that come with running a company, especially amid a global crisis.
With the current uncertainty, you need a law firm that works in your best interest and that of your company. We’ve worked with countless clients to give them a clear plan for the future of their businesses. At The Pope Firm, our attorneys protect you and offer the best advice to help you plan your next move.
Before you turn to bankruptcy, talk to a professional. You might have more options than you thought, and you may be able to avoid bankruptcy altogether.
We have offices located in Johnson City, Knoxville, Kingsport, Chattanooga, and Morristown, TN and want to help you through this difficult period of your life. Contact us, and we can help you to decide how to move forward with the proceedings, and you can have confidence that your steps will be guided in the right direction.
Depending on your situation, there are different types, officially known as “chapters” of bankruptcy, that you can file for. These different chapters of bankruptcy provide different results for different cases, and it’s important to have some knowledge on these chapters before filing for bankruptcy.
Chapter 7 bankruptcy is a commonly filed for chapter of bankruptcy and is intended for use by low to moderate income individuals with more debt than they’ll ever be able to repay. If properly executed, this chapter of bankruptcy can eliminate most or all of a person’s unsecured debt. If you’re eligible, Chapter 7 could be a great debt relief solution for you.
Another great debt relief solution is Chapter 13 bankruptcy, that works great for people that aren’t eligible for chapter 7 bankruptcy. This chapter allows the debtor, or person that has borrowed money, to restructure their payment plans to be more manageable. At the end of this payment plan, most unsecured debts are discharged, or eliminated. This is sure to provide some much-needed breathing room for those people that feel in over their head, and are in need of some debt relief.
I recently went through bankruptcy and the Pope Firm was very helpful in a very embarrassing situation. They went through the process of how bankruptcy works and made what could have been a very difficult time much easier to handle. I would recommend this law firm to anybody who is going through a bankruptcy. Everyone there is very knowledgeable and willing to answer any questions.
My experience at this firm so far has been excellent. Everyone there is very friendly, informative and willing to help in any way they can. I was impressed with how fast they got everything moving
Charles pope and his staff are wonderful and always ready to do anything they can to help. He explained what to expect in court and what needed to be done before hand. He assistants are very helpful and knowledgeable. He always kept me informed on the status of the case. I would highly recommend this firm to anyone who needs an attorney.
Bankruptcy occurs when an individual, business, or other entity declares the inability to repay its debts. If you file for bankruptcy, that means that debt collectors must pause attempting to collect debts from you. Bankruptcy often allows you to erase most, if not all, of your debts.
There are two types of debts, unsecured and secured. Some examples of unsecured debts are credit card bills, medical bills, or taxes. Secured debts can include car loans or mortgages, which use the purchased item as collateral. In many cases, filing for bankruptcy can keep this collateral protected and prevent foreclosure of your home or repossession of other assets.
Bankruptcy is governed by federal legislation under the Bankruptcy Code, which falls under the greater United States Code. Both federal law and local law inform the bankruptcy procedure. Federal bankruptcy judges, appointed by the United States court of appeals, preside over court proceedings in these cases. In court, the judge and a court trustee, review your finances to determine whether or not to discharge the debts at hand.
Each state has one or more bankruptcy courts. Tennessee has six bankruptcy courts throughout the state.
Filing for bankruptcy can be a daunting process, and working with a firm with expertise in the field can provide you with necessary guidance.
There are several types of bankruptcy. Most individuals, married couples, and small businesses choose to file under Chapter 7 or Chapter 13.
The primary difference between these two types is that Chapter 7 bankruptcy allows an entity to fully discharge its debts in a short period. A Chapter 13 bankruptcy involves reorganizing debts and creating a plan to repay those debts over an allotted time. After that time, Chapter 13 eliminates most of the remaining debts.
Chapter 7 bankruptcy is typically filed by those with very limited income and unsecured debts, the most common of which is medical bills. Chapter 13 bankruptcy is most often filed by higher income bracket individuals and those with more assets, such as a car or a home. The motivation for filing Chapter 13 bankruptcy is often preventing assets from being repossessed or home foreclosure due to outstanding debts.
Two other types of bankruptcy are Chapter 11 and Chapter 12.
Chapter 11 primarily applies to larger companies and corporations, but sometimes it is the right choice for small businesses as well. Chapter 12 applies to those who are considered family farmers.
Various considerations get factored into who should file bankruptcy. Filing bankruptcy may be the right choice for you if you are overwhelmed by debt. Regardless of what type of bankruptcy you file, as soon as the process begins, you are granted an automatic stay. A stay is an injunction that prevents creditors from collecting any debts for an allotted time. An automatic stay halts the process of, for example, foreclosing on a home or repossessing a vehicle.
A Chapter 7 bankruptcy will discharge most of your debts. Filing Chapter 7 is appropriate for those who make less than the median household income in Tennessee and whose assets would not be at risk. In this situation, your non-exempt property is sold to pay off creditors.
Chapter 13 bankruptcy allows you to create a plan to repay your debts. If you have non-exempt property used as collateral in secured loans, you can restructure your finances to pay off any relevant debts over the next three to five years. Chapter 11 functions in a similar way, but is exclusively for businesses.
Filing for bankruptcy can provide a fresh start for those bogged down with debt, either by restructuring finances or discharging debts entirely.
How bankruptcy affects business depends upon the type of bankruptcy filed.
Businesses classified as corporations, partnerships, or LLCs can file Chapter 11 bankruptcy. Chapter 11 allows for debt restructuring, while the business stays open. As in Chapter 7 and Chapter 13, an automatic stay activates as soon as your bankruptcy period begins. In an automatic stay, creditors cannot try to collect money or other assets from you.
During this period, you work with your lawyer to restructure your debts and develop a plan to get your business back on track. This plan must be approved by some of your creditors and a bankruptcy court to go forward. You will be able to repay your debts over several years.
Filing Chapter 7 bankruptcy discharges all of your business’s debts by liquidating your assets. The entire process can be completed quickly, often in several months. Chapter 7 allows for the discharge of most debts, excluding government taxes and fines.
Only individuals can file for Chapter 13 bankruptcy. Thus, although businesses cannot file, you can file Chapter 13 as the sole proprietor of your business.
When you decide to begin the bankruptcy process, the first step is to find a lawyer who is an expert in filing bankruptcy in Tennessee. Hiring a bankruptcy lawyer can indeed be expensive, but it is worth the cost. This professional can guide you through what type of bankruptcy is best for your situation and what to expect throughout the process.
Declaring bankruptcy wipes out many debts, but not all.
Bankruptcy can clear most unsecured debts, including:
Bankruptcy can also clear many secured debts, but it depends on whether you file for Chapter 7 or Chapter 13 bankruptcy. For Chapter 7, you will have to give up any non-exempt items you put up for collateral. For Chapter 13, they will become part of your repayment plan.
No type of bankruptcy covers these debts. If you file for Chapter 7, they remain outstanding. Under Chapter 13, you pay these debts along with your other debts.
Bankruptcy rarely covers student loan debt. However, it may be in some cases with proof of undue hardship.
Tax debt is also rarely covered, but bankruptcy may cover certain old unpaid taxes.