For small businesses with the available means to restructure and continue operation, Chapter 11 bankruptcy may be an effective method.

Which is Right for You? Chapter 7 vs. Chapter 11

If you’re at the point where you know you need to file for bankruptcy, it’s pretty easy to get confused as to which bankruptcy filing is going to be the best for you.

Make no mistake, bankruptcy means a lot of changes in your life, and nobody breezes through any of them. First, let’s look at key points of Chapter 7 and bankruptcy Chapter 11. These points work just the same for a person as for a business, with the key difference that a business choosing a chapter 7 will close its doors, while a business choosing a Chapter 11 bankruptcy can stay in business, discharge its debts, and while still remaining open.

Chapter 7
  • Liquidation of certain assets. Some assets are exempt from liquidation under Florida law.
  • Forgiveness of debts when no assets exist or have valid liens against them.
  • The absolute priority of payment goes first to secured creditors, then unsecured creditors, and then investors.
Chapter 11
  • Restructuring of debts in order to make repayment, also called rehabilitation or reorganization.
  • Debt forgiveness only after the terms for repayment are satisfied pursuant to a confirmed Chapter 11 plan.

In a Chapter 7 a trustee is appointed to oversee the bankruptcy, but in the case of a small business bankruptcy Chapter 11 the current management stays in place and develops a repayment plan, while still shielding key property from liquidation. In the case of a Chapter 7, the trustee liquidates all but exempt assets and pays the creditors. Business bankruptcy Chapter 11 is more expensive as the filing is more complex than just a straight Chapter 7, but it gives you more control over business and personal assets, which is especially important if you’re a married couple, or a have a small business in a sole proprietorship.

Should a Business File for Chapter 11 Bankruptcy Without an Attorney?

Because bankruptcy is so complex, it should not be treated as a DIY project.

In Florida, a business MUST be represented by a Florida licensed attorney. While the advent of electronic filing has many people choosing to sally forth into bankruptcy, there are still expenses associated with filing outside of attorney’s fees. Even if you only consult with a Chapter 11 bankruptcy attorney, you could still benefit from the advice of someone who has handled many bankruptcies, and can help you improve your outcome. It’s easy to feel as if this is the end of the world, but many people and companies are able to come back from the bad times, and prosper.

Talking to an Experienced Chapter 11 Bankruptcy Attorney

Bankruptcy has a huge impact on your credit score, and should be considered only as a last resort.

An experienced Chapter 11 bankruptcy attorney can help you decide what’s right for you as a person or as a company. You may feel that you can’t surmount the debts you have, but there are alternatives to bankruptcy that we at Van Horn Law Group can help to negotiate for you. If, however, it turns out that bankruptcy is the best choice for you, we have the experience to help you through a stressful time with as few bumps as possible.

About Our Zero Down Bankruptcy Option

While many people opt to pay for fees at once or on a retainer basis, some prefer to utilize our $0 Down payment option. Here's how it works: After you sign an engagement for services agreement with our firm, generally speaking, the court filing fees and costs will be paid up front. These can be waived in certain circumstances. You do not pay anything initially for our bankruptcy legal fees. We work out a payment plan with you, where you are aware of the fees in advance for our services. You'll pay on a monthly basis over 12 months until our fee is paid. Some clients find this helps to allow them to meet all their obligations while the bankruptcy process proceeds. If you have further questions about our services or this option, please don't hesitate to contact our office.

Client Fee Payment Policy