This past year, countless businesses have found major financial struggles during the pandemic. Where many people believed that a new year would bring more opportunity, and quite frankly less COVID, but that has simply not been the case. Where business owners and corporations have found difficulty, Chapter 11 bankruptcies have helped provide a path through.
Who is Able to Qualify?
Chapter 11 bankruptcies are unique to other chapters due to the fact that is it only available to small businesses, corporations, and partnerships that were not able to qualify for either Chapter 7 or Chapter 13. There are debt limits that disqualify debtors from filing under Chapter 13:
- $419,275 in unsecured debt
- $1,257,850 in secured debt
If your debts exceed these amounts within the given categories, then it may be a good indicator that filing for a Chapter 11 bankruptcy is the right move.
Why it Works
Chapter 11 bankruptcies have been a crucial part of solving business debts for many years. The reason why it is so effective is the fact that a business owner has the ability to maintain business operations while the bankruptcy process is ongoing. This means that filers of Chapter 11 are not only offered a better way to pay off their debts, but are also able to earn income to provide for themselves, their families, and their employees.
Chapter 11 bankruptcies also operate similarly to Chapter 13, where a payment plan is proposed to extend the life of current payments. This gives debtors an ample amount of time to not only reorganize their company to better suit the bankruptcy, but also lowers the amount of debt to be paid over a longer period of time.
Businesses are also not required to liquidate their assets to make payments on their debt, and automatic stay is put in place to make sure their creditors are legally prohibited from taking any collection acts against them.
Contact Our Knoxville Bankruptcy Team Today
We understand that how much of an impact the COVID-19 pandemic has had on businesses across the country, and even the world. We are committed to helping you find creative and cost-effective solutions to guide you to the financial freedom you deserve.
If you think Chapter 11 could be right for your business, don’t hesitate to contact us today through our website or give us a call at (865) 328-7993 to schedule a consultation!