Filing for Chapter 11 bankruptcy can be a more flexible choice for business owners who want to keep their doors open rather than shutting down. Instead of having all of your debt discharged by forfeiting your business’s assets, you and your Wisconsin business bankruptcy attorney effectively negotiate a debt repayment plan with the court. But since you can’t just walk away from your business like you would with Chapter 7, it’s important that you know what to expect after you file. Let’s take a closer look.
You’ll Need to Make Payments on Time
Filing Chapter 11 bankruptcy lets you enter into a repayment plan with your creditors. But to make sure that everything goes off without a hitch and you’re not forced to close your doors, you’ll need to make payments on time and in full according to your bankruptcy settlement. If you’re not sure when payments are due, contact your attorney and let them review your settlement with you. They’ll be able to clear up any confusing terms so you can keep your repayment plan on track.
You May Need the Court’s Approval to Make Changes to Your Business
Though you’ll be able to keep the doors open, you may not have as much control over your business as you’re used to. The court can oversee certain decisions that you want to make with your business until you repay what you owe your creditors based on the settlement. If you’re considering working with a new vendor or plan to hire an attorney to help oversee the legal side of your business, you may need the court’s approval before you can take action. If you’re unsure if a change you’re thinking of making requires a legal review, speak with your Wisconsin business bankruptcy attorney.
You’ll Still Need to Focus on Growth
Though your creditors won’t be hounding you to get payments as long as you stick to the repayment plan, you’re still not in the clear. Remember, you need to make those payments on time and in full each month. This means you need to have reliable cash flow throughout the year, and ideally find ways to grow that cash flow so you can avoid going into debt in the future.
Be sure that your post-bankruptcy plan involves positioning your business for growth after making the necessary adjustments to keep it afloat. Chapter 11 bankruptcy is a long-term strategy, not something that can be wrapped up in a month or two after you file.
Your Debts Won’t Discharge Until You Repay What You Owe
When you file for Chapter 7, your debts are discharged when your bankruptcy is settled in court. But with Chapter 11, your debts won’t be discharged until you’ve repaid everything according to the repayment plan. Once you make your final payment, your obligation to those creditors and the bankruptcy court will be over and your case will be closed.
Is Chapter 11 Bankruptcy Right for Your Business?
Filing for Chapter 11 bankruptcy isn’t the right fit for every business. But if your company is still profitable and you’re confident in your ability to make the required payments, it can be a great option. Take the time to consider how your business is performing and your outlook for the next few years. If you think you’ll continue growing and will be able to maintain a steady cash flow that can cover your debt and your routine expenses, Chapter 11 could be a great choice.
Work With a Wisconsin Business Bankruptcy Attorney
If you’re considering filing for Chapter 11 bankruptcy to settle your debt while still keeping your doors open, you shouldn’t try to do it on your own. Let an experienced Wisconsin business bankruptcy attorney help you through the process. Contact Kerkman & Dunn today to schedule a free consultation.
