Ontario Small Business Bankruptcy Lawyers
When you think of bankruptcy, you may think of it as an option for individuals only. However, if your business is struggling financially, you can opt to save it or liquidate it through bankruptcy. The decision you make about the fate of your business will determine which type of bankruptcy you should choose.
As a business owner, you have three options: Chapter 7, Chapter 11, and Chapter 13 bankruptcy. Each has pros, cons, and eligibility requirements. Which one is right for your business? Contact an Ontario small business bankruptcy lawyer from Wadhwani & Shanfeld to learn more.
What is Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is known as a liquidation, so it’s the best choice if you want to shut down your company and don’t have the income to pay into a repayment plan. It can help a business close by selling its property to pay creditors. Chapter 7 allows you to erase qualifying debt, allowing you to shut down your business without too much drama. Because there is no repayment plan, the bankruptcy is completed fairly quickly — typically in under six months.
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is the better option if you want your business to remain open. This type of bankruptcy allows you to modify your financial obligations and repay debts under a payment plan. It’s a good way to provide debt relief to high-income earners without a business and do not qualify for Chapter 13, although this is not common.
Almost anyone can file for bankruptcy under Chapter 11, including Individuals, corporations, partnerships, and limited liability companies. There are no debt or income requirements or any other financial limitations.
Chapter 11 can help you in the following ways:
- Extending payment terms
- Modify monthly payment amount
- Lower interest rates
- Reduce debt balances or eliminate them altogether
- Sell assets
What is Chapter 13 Bankruptcy?
Chapter 13 bankruptcy is more limited, as it is available only to individuals and sole proprietors with regular income. Small companies formed as corporations, partnerships, or other entities are not eligible for Chapter 13 relief. You’ll need sufficient income to support a Chapter 13 plan and will be subject to debt limitations, so not everyone qualifies.
A Chapter 13 bankruptcy works similar to a Chapter 11 one. It allows business owners to reorganize debts. A small business can benefit from a Chapter 13 bankruptcy because it can free up cash. The payment plan focuses on secured debts such as mortgages, car loans, and equipment payments.
Contact Wadhwani & Shanfeld Today
Businesses are not immune to financial issues. If you are a business owner who is struggling to keep your business afloat, bankruptcy may be able to help.
Count on the team at Wadhwani & Shanfeld for the legal advice you need to determine the future of your business. Our Ontario bankruptcy for small business owners lawyers can help you understand your options. Call (800) 996-9932 to schedule a consultation with our office today.
