If you are closing a business due to bankruptcy, it is important to know your options. Eight out of every ten business owners will face serious financial problems at some point. Financial issues can occur for many reasons, whether it is the overall economy or a poorly conceived business strategy, there are really only 3 viable choices for a business when facing the financial crunch:

• Find a way to secure more financing
• Default on your loan
• File for a business bankruptcy

Going bankrupt is the simplest way to escape those relentless creditors, but it creates a red flag for your future financial endeavors and hurts your credibility as a business owner. Unfortunately this can lead to both business and personal issues down the road.

If you are closing a business and going bankrupt, you can file under one of three chapters of bankruptcy - Chapter 7, Chapter 11, or Chapter 13. In some cases your business must shut down during bankruptcy, while in other cases your business may remain open. Bankruptcy may be a way to get out of an oppressive lease and provides an orderly way for closing a business. While it can create a black mark on your credit score, filing for bankruptcy does not stop you from trying again and starting a new business in the future.

The following are the different types of bankruptcy and how they could apply to you if you are closing a business:

Chapter 7 This chapter is available for those businesses that are closing permanently. Although valuable assets may be liquidated and used to pay off the debt, this chapter of bankruptcy releases the filers from any obligation to pay. Chapter 7 is available to any type of business.

Chapter 11 Since corporations do not qualify for a Chapter 13, Chapter 11 is available, allowing businesses to reorganize debts and gradually pay them off. Businesses can even remain open during the bankruptcy process while they pay off their debts, and have 6 years to do so. Chapter 11 is available to any business, including corporations.

Chapter 13 Sole proprietors can file for Chapter 13, although they must file as individuals with business debts for which they are personally liable. Upon filing, an automatic stay is initiated, which prohibits the creditors from making any attempt to collect their debt, including starting foreclosure and repossession. Corporations may not file for Chapter 13.

You may have to close your business down if you file for Chapter 7 personal bankruptcy. However, you may be able to keep your doors open if you own an LLC or corporation with the other Chapters, even if you’re liable for a significant portion of its debt.

Even though bankruptcy is federal law, and most states have similar procedures on handling bankruptcy, bankruptcy filing law differs from state to state.This is why it is a good idea to always consult with a bankruptcy attorney from the state where your case is taking place.

The lawyers at Chang & Carlin, LLP are sensitive to the difficult decision you may be facing and are here to help you through this tough financial and personal time in your life. If you are considering closing a business and going bankrupt, let us help you determine what your options are and create a road map to guide you through the process of getting the best results possible for you and your business.

DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.

What is Chapter 11 Bankruptcy and how does it compare to other forms of bankruptcy? To begin, Chapter 11 tends to be targeted to larger businesses, but individuals may also use this reorganization plan. Under Chapter 11, businesses and individuals may restructure their debt without liquidating their assets. So who typically uses Chapter 11?

• Small businesses
• Individuals
• Partnerships
• Corporations
• Other business entities

This plan allows these parties to reorganize operations and continue running through the whole bankruptcy process. Individuals with high levels of debt may use this process, but it can be very complex and costly. Most individuals seeking bankruptcy without liquidation prefer to file under Chapter 13.

What is Chapter 11 for Individuals?

• Chapter 11 is often the only option available to an individual debtor with income greater than that allowed by Chapter 7, and has secured debt greater than that allowed by Chapter 13.
• For example, an individual may own a large section of real estate property, but does not have sufficient liquidity to pay debts as they occur.
• Chapter 11 benefits individuals by allowing them to keep assets beyond the exemptions available under Chapter 7 and Chapter 13.
• Chapter 11 cases for individuals are infrequent, so if you are an individual considering filing Chapter 11 the guidance of a bankruptcy attorney could be very beneficial.

To initiate a Chapter 11 Bankruptcy case, a voluntary petition is filed with the bankruptcy court. Once the initial filings have commenced, all assets, liabilities, and a statement of financial affairs also must be filed.

Automatic Stay: Once the Chapter 11 process has begun, creditors must cease all actions to collect money owed to them from you or your business immediately. This allows an individual or business to begin negotiations with creditors, granting you some time to work through financial difficulties.

Chapter 11 also grants the exclusive right to file a plan of reorganization for a period of 120 days and to solicit a plan of reorganization for a 180 day period.

To better understand what Chapter 11 bankruptcy is, knowing the basics of other common types of bankruptcy is also useful:

Chapter 7 Bankruptcy: Probably the most common form of bankruptcy used by individuals, although businesses also may file under Chapter 7.  

• A court-appointed trustee assesses and gathers the individual’s assets.
• The assets are sold by the trustee for cash which pays off creditors.
• Some assets may be exempt, and these will not be liquidated.
• Chapter 7 filing cannot be repeated for six years.

Chapter 12 Bankruptcy: This voluntary bankruptcy is tailored specifically for farmers and fishermen who have a steady income.

• The debtor establishes a plan to pay off all or part of their debts over a certain period of time.
• Chapter 12 is a much less daunting and expensive procedure than Chapter 11.

Chapter 13 Bankruptcy: Works for individual debtors with a steady income and small businesses.

• During “individual reorganization,” debts are paid over a 3 to 5 year period and the debtor may keep their property.
• Chapter 13 stops foreclosures and repossessions.
• Once a plan is confirmed, creditors will be required to accept payments according to the terms of the plan or not get paid at all.

Hopefully this overview has been useful for those wondering, ‘What is Chapter 11 Bankruptcy?’.

Even though bankruptcy is federal law, and most states have similar procedures on handling bankruptcy, bankruptcy filing law in Illinois differs from laws in other states.That is why it is a good idea to always consult with an Illinois bankruptcy attorney.

The lawyers at Chang & Carlin, LLP are sensitive to the difficult time you may be facing and are here to help you through this tough financial and personal time in your life. If you are considering filing bankruptcy, let us help you determine what your options are and create a road map to help you get out of debt.

DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.

Recording artist R. Kelly is reportedly about to lose his Chicago property to foreclosure. The huge 11,000+ square foot home boasts 13 bathrooms and a four car garage.

According to the Chicago Sun Times the value of the home has decreased $1.2 million from is estimated worth of $5 million in 2009. Kelly owes over $2.9 million on the home.

The news of Kelly's potential comes shortly after recording artist Prince narrowly escaped foreclosure on his home. Prince saved his home by making a large lump sum payment to satisfy creditors. Prince's property was not the current home of his residence but a property that he had torn down the main house to build a new one. The project is not complete.

In other financial news Giordano's recently filed for chapter 11 Chicago and the Los Angeles Dodgers have also filed chapter 11. Chapter 11 bankruptcy does for businesses what chapter 13 bankruptcy does for individuals. It is often referred to as "restructuring" because the business or individual assets are not liquidated.

It is surprising to hear that well known businesses and celebrities are suffering financially and may go bankrupt or foreclose on their homes. This just proves how difficult of an economic time it is right now and how important it is to make good financial decisions.

If you are struggling with debts or mortgage payments seek out a credit counselor and if that doesn't work find Illinois bankruptcy lawyers or a foreclosure attorney in Chicago that offers a free legal consultation. Use this meeting to get the answers you need about bankruptcy and foreclosure. You may find a solution that suits your situation and you will be free of the stress of debt.

If nothing else you can rest easy knowing that you are in very good company as far as other people and businesses that are struggling financially.

DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.

It is a surprise to most of us when a well known business files for bankruptcy in Chicago. But it happens to businesses all over the country. The most recent victim of bankruptcy is MLB team the Dodgers.

Businesses will file for bankruptcy in Chicago for all different reasons. Not long ago famous Chicago pizza chain Giordanos filed for chapter 11 bankruptcy. Chapter 11 is what the Dodgers are trying to file as well.

Filing chapter 11 bankruptcy is similar to filing chapter 13 in Chicago. Chapter 11 is for businesses but chapter 13 is for individuals. The idea behind these two forms of bankruptcy is that they allow you to restructure your finances and get back on your feet.

Major league baseball is still very popular in our country and there are lots of opportunities for earning money and increasing sales. It is anticipated that Dodgers owner Frank McCourt will try to show how he can restructure the team to make money and survive on it's own after the help of chapter 11. However if the judge does not see the validity of his claims then the Dodgers will be forced to liquidate their assets (sell the team) in order to pay off creditors. It was reported by the NBC Sports HardBallTalk that the team filed for bankruptcy and was unable to make payroll that was due in three days.

Similar to chapter 11, if an individual was filing for chapter 13 Chicago they would have to prove that they have a reliable and steady income coming in. If they have income but are overwhelmed by debts they would be put on a payment plan to pay off creditors. If the plan is kept for 3-5 years then debts would be discharged and the debtor would receive the benefit of a clean slate that comes with bankruptcy.

DISCLAIMER: All information on this website are provided for informational purposes only and are not intended to be construed as legal advice. Chang & Carlin shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon.