Filing Chapter 7 bankruptcy might mean the end of your business. The court will sell off all the assets of the business and distribute the resulting money among creditors. Your business will get out of debt, but there rarely remains any source of income. This means you will probably have to close the business. Analyze all available options before taking such a drastic measure. Filing Chapter 7 bankruptcy, a complex process for a business, will require you to secure specialized legal counsel like a chapter 7 bankruptcy attorney.
- You should not file bankruptcy under Chapter 7 without a bankruptcy attorney, especially for businesses. If you make any mistakes because of lack of legal knowledge, the court might dismiss your bankruptcy file. Look for a law office with good references and knows chapter 7 bankruptcy laws and start gathering the documentation necessary.
- Provide your bankruptcy attorney with all required documents as well as a detailed list of all your creditors and debts. Discuss with your lawyer the business assets that might qualify for exemption and that you possibly can keep.
- Fill in a bankruptcy application, attach all the documents and hand them to your lawyer. Your bankruptcy attorney will file the bankruptcy petition for you.
- You will receive information about the trustee who will handle your case as well as details regarding a meeting with your creditors. Attend all these meetings along with your lawyer. You will have to answer a series of questions your creditors pose while under oath. Understand that omitting information or lying can qualify as perjury, which could have serious consequences that might culminate in the dismissal of your file, fines and even jail time.
- During your first meeting with your creditors, the judge will not ask you any questions. You will have to answer all the questions the creditors pose, as the lawyer cannot object to any of them.
- Within 30 days of the meeting with the creditors, you will receive a notification from your trustee about the status of your exemptions.
- Before the court makes any decision about your bankruptcy file, you will receive court orders to halt all work and production. Prepare to observe these orders to avoid the dismissal of your case.
- Treat your employees fairly and inform them about the bankruptcy procedures. Chapter 7 bankruptcy does not necessarily mean they will face unemployment because the company that purchases your assets could decide to keep the employees.
- If any money remains after selling the assets and paying the creditors, shareholders can claim it.
- Before filing for Chapter 7 bankruptcy, consider restructuring the debt of your business through Chapter 11 bankruptcy. You will have more chances of keeping your business open afterward.
- If you get letters and phone calls from your creditors after bankruptcy, remember that they no longer have the legal right to ask for money from you.
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