Did you know that Kingston has experienced a significant increase in business bankruptcies over the past five years? If you’re a business owner in Kingston, it’s essential to be aware of the different types of bankruptcy that may be applicable to your situation.
From Chapter 7 and Chapter 11 to Chapter 13 and Liquidation Bankruptcy, understanding these options can help you make informed decisions about your financial future.
So, let’s explore the various types of business bankruptcy in Kingston and discover which one might be the right fit for you and your business.
Chapter 7 bankruptcy is a legal process that allows you, as an individual or business, to eliminate your debts and start fresh. This type of bankruptcy is also known as liquidation bankruptcy because it involves selling your non-exempt assets to repay your creditors. Once your assets are sold, any remaining debt is discharged, meaning you’re no longer legally obligated to repay it.
Chapter 7 bankruptcy is a popular option for individuals and businesses looking for a fresh start, as it provides a relatively quick resolution to overwhelming debt. However, it’s important to note that not everyone is eligible for Chapter 7 bankruptcy. To qualify, you must pass the means test, which assesses your income and expenses to determine if you have the ability to repay your debts.
If you’re a business owner facing overwhelming debt, Chapter 11 bankruptcy provides a viable solution to reorganize your finances and continue operating.
This type of bankruptcy is designed specifically for businesses and allows them to create a plan to repay their debts while still remaining in business.
Chapter 11 bankruptcy gives you the opportunity to negotiate with your creditors and come up with a repayment plan that works for both parties.
It also allows you to continue operating your business while you work towards paying off your debts.
This can be a complex process, but with the help of an experienced bankruptcy attorney, you can navigate through it and come out on the other side with a fresh start for your business.
To file for Chapter 13 bankruptcy in Kingston, you’ll need to meet certain eligibility requirements and create a repayment plan to address your debts.
Chapter 13 bankruptcy, also known as the wage earner’s plan, is designed for individuals with a steady income who want to repay their debts over time. Unlike Chapter 7 bankruptcy, which involves liquidating assets to pay off debts, Chapter 13 allows you to keep your property while making monthly payments to a bankruptcy trustee.
The repayment plan typically lasts three to five years, during which you’ll make regular payments to the trustee who’ll distribute the funds to your creditors. Once the repayment plan is successfully completed, any remaining eligible debts may be discharged, providing you with a fresh start.
Liquidation bankruptcy, also known as Chapter 7 bankruptcy, is a process that involves selling a debtor’s assets to pay off their debts. This type of bankruptcy is often used by businesses that have no hope of reorganizing and want to close down their operations. When a business files for liquidation bankruptcy, a trustee is appointed to oversee the sale of the company’s assets. The proceeds from the sale are then used to repay the business’s creditors. After the sale, the business ceases to exist.
Liquidation bankruptcy provides a fresh start for the debtor by allowing them to eliminate most, if not all, of their debts. However, it’s important to note that not all debts can be discharged in a Chapter 7 bankruptcy.
Reorganization bankruptcy, also known as Chapter 11 bankruptcy, is a process that allows businesses to restructure their debts and continue their operations under court supervision. This type of bankruptcy is often chosen by businesses that believe they’ve the potential to become profitable again in the future.
By filing for reorganization bankruptcy, businesses can develop a plan to repay their creditors over time while also maintaining control of their operations. This process provides the opportunity for businesses to negotiate with creditors and reduce the amount owed, extend the payment period, or even eliminate certain debts.
Reorganization bankruptcy offers businesses a chance to regroup, reorganize their finances, and ultimately achieve a fresh start while preserving their relationships with suppliers, employees, and customers.