Introduction: What is Bankruptcy?
In finance classes, bankruptcy is spoken of as a bad decision when it comes to any situation. When a business goes bankrupt, people think of mass unemployment. When someone goes bankrupt in Laguna Beach, people think of homelessness. While it isn’t exactly as bad as people think of it to be, it is not a decision that anyone wants to have to make. Small businesses could lose their family-run companies, people could lose their cars, and much worse can happen, but it is generally up to a court of officials to make the decision about what stays and what goes. However, the question is, what is bankruptcy. More specifically, what is chapter 11 bankruptcy, and how can it help you?
Bankruptcy is the act of people or businesses who have debt filing to have some or all of their debt taken away. This is usually filed by the debtor, and taken into a court of law to be decided. There are many different types of bankruptcy. Some actions that may be done during bankruptcy would be :
- Taking some or all of the debt away from the debtor with stipulations.
- Taking some or all of the debt away from the debtor with no stipulations
- Taking away the items that have caused the debt.
- Giving the debtor the option of paying back allowed money in smaller, more manageable increments.
- More options available depending on the situations given
Declaring bankruptcy can damage your credit as a result of filing. Because of the severity of filing, this could show up on your credit statement for up to 10 years. This is because declaring bankruptcy, broken down to its simplest form, is saying that you are unable to pay the debts that you have accrued as you had planned to. This is asking for help with the debt that you had put yourself into.
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy in Laguna Beach, CA is different from filing normal bankruptcy. It is more commonly known as the “reorganization bankruptcy”. This is due to the reorganization of debt that chapter 11 bankruptcy issues, so that one may be able to pay off the debt, while still being able to keep their items. This allows businesses and people to:
- Keep their businesses active while paying off the debt
- Keep income flowing into their business, so they can also keep people employed
- Pay off their debt in a manageable way.
This benefits not only the debtor but also benefits the business in Laguna Beach and those who work there, as jobs would be secure and pay would be secure. The money will still be coming into the business to make sure that the debts are still paid, but are paid off in more manageable increments. This does not impact your credit as much as other options, because you are still paying off the loan. However, it does still impact it to an extent.
Do I Qualify For Chapter 11 Bankruptcy in California?
How does one know if they qualify for chapter 11 bankruptcy in California? Since chapter 11 bankruptcy is mostly used by large scale businesses, it is no surprise that you would need a lot of debt to qualify. It does depend on the circumstances of the debtor to know how much you would need to apply for chapter 11 bankruptcy. Some websites that inform others of the types of bankruptcies have tests to see if one qualifies, but how are you to know if that is trustworthy or not. Truth is, you never know if you qualify until you apply and are given the verdict. However, it is known that those who seek bankruptcy for their debt need to have too much debt to qualify for chapter 7 and chapter 13 bankruptcy in Laguna Beach, CA.
Should You File for Chapter 11 Bankruptcy Laguna Beach?
Chapter 11 bankruptcy in California has a higher minimum of debt than that of chapter 7 and chapter 13. For this reason, it is highly recommended that you think through the decision to file for this type of bankruptcy. It is also recommended that if you have high debt, and still would like for your business to be active while in bankruptcy, it is encouraged to apply. This way you can pay off the debts you owe, while also getting a steady income. While you may still have to pay off your debt, this will ensure that there is still income coming in to be able to pay off those debts. It is thought of as an even trade, you keep your business and things that have caused the debt, and you still have to pay them off, just not in hefty lump-sums of money at a time.
Pro’s and Con’s of Chapter 11 Bankruptcy in Laguna Beach, CA
Some Pros for chapter 11 bankruptcy in Laguna Beach have been previously stated above. However, some negative repercussions of chapter 11 bankruptcy are:
If your bankruptcy petition has been dismissed in the last 180 days due to willful failure to appear before a court or comply with court orders, you are not able to apply.
- That it still affects your credit.
- All major decisions that would need to be made in the business would need to be made by the court system that you filed with.
- Student Loan debt tends to not be affected by the declaration of bankruptcy
- If you were voluntarily dismissed within the last 180 days after the people who you owe money to seek relief from the bankruptcy court to recover items they have liens on, you cannot
Every decision that needs to be made has good and bad to it, but this is a decision that could potentially end a business in Laguna Beach, California, or end one’s affiliation and ability to control a business. Bankruptcy is not a joke or a topic to take lightly. Chapter 11 bankruptcy should not be taken lightly either, especially if you own a business and plan on keeping the business. Even if you don’t make all of the major decisions for the business, being able to keep it and make more with it is just rewarding.
Bankruptcy in California is a decision that should be carefully researched and thought about. It is not a decision that should be taken lightly, as it could change the way your business runs if it is to run at all. This is something that could easily impact an entire business, their employees, and everyone who depends on those employees. Be conscious of the consequences, educate yourself of the risks and the benefits, and make the decisions that would benefit everyone involved. This is how a business owner should plan to make decisions, as once the business opens back up, the decisions of the employees could decide your future from there.