Why a Bankruptcy Lawyer is Worth the Expenses

With the economy stuck in trying times due to the ongoing Covid-19 pandemic, bankruptcy filings are probably piling up at a dizzying pace.

You cannot think of a better time to discus on how to navigate this challenging process.

As in any legal issue, the key consideration in getting the best value for your counseling buck centers on how well you communicate with your bankruptcy lawyer. 

If you are in business and passing through financially demanding times, filing for bankruptcy can be on top of your mind.

A bankruptcy law firm in Maryland will offer you two options.  

• Chapter 11 reorganization – a time consuming and expensive process
• Chapter 7 liquidation – a setting where your business assets are liquidated and your company comes to a close 

Keep in mind that both Chapters 7 and 11 provide debt to filers, yet both types vary significantly.

Here are the essentials.

• Chapter 7 helps a business close by selling off its assets to creditors. As a businessperson you get a fresh start by erasing qualifying debt.
• Chapter 11 allows you to continue your business by modifying financial obligations. 

This is how Chapter 7 works

You qualify for Chapter 7 only if you are not financially strong to manage a long drawn repayment plan. 

Moreover creditors will receive payment only if you own assets that can be sold by the Chapter 7 trustee. In the absence of a repayment plan, Chapter 7 is the fastest bankruptcy to complete.

Nevertheless, how long a Chapter 7 will take will depend on the property owned by you.

If you are a no-asset case, which allows you to protect all property by leveraging the exemptions, the case can conclude faster. 

It is a condition where you have “no property to sell and no creditors to pay” – a situation that can take not more than 3 to 4 months to get over.   

Keep in mind that even Chapter 7 can be complicated, because it does not treat all filers alike. Your status as an individual, sole proprietor or a business entity will govern the rules applicable for you.

There are several issues that can crop up such as:

• Chapter 7 qualification requirements
• Your property the trustee can sell
• The possibility of a creditor lawsuit
• The exposure of your individual assets for business debt repayment 

A wrong step can result in significant losses. It is for this reason that taking assistance from a bankruptcy law firm Maryland can be beneficial for you.

This is how Chapter 11 works 

You could be running a viable business and yet your income stream can decrease because of certain unforeseen events, such as the present Covid-19 pandemic.

In such a scenario Chapter 11 can help. 

You can restructure your debt in any mode that will allow your business to remain open as long as the court and lenders agree.

The plan can be an assortment of:

• Lowered interest rates
• Resolving outstanding issues
• Modifying payment terms
• Selling assets

Some of the key benefits you get are that an experienced lawyer will quickly identify any potential issues in your case and will plan accordingly.

Bankruptcy law firms in Maryland will consider alternatives to bankruptcy and decide to file your case under the appropriate bankruptcy code.