A Small Business’s Guide to Filing for Bankruptcy

As a small business entrepreneur, you might be unaware of when your business struggles. So, there are chances that you are uncertain about the best time to file for bankruptcy. Considering the situation, you need to undertake the right steps to keep your business flourishing.

In short, bankruptcy enables the small business to restructure or discharge debt and get the finances. While bankruptcy might turn out to be beneficial, you cannot neglect the downfalls. Have a word with a proficient bankruptcy attorney Brooklyn NY, before you make your decision.

Small Business Reorganization Act (SBRA)

According to the small business reorganization act, the act includes the provisions like the following:

Streamlining the overall reorganization procedure:

According to this act, businesses can take advantage by eliminating procedural costs as well as other needs associated with corporation reorganizations. The low-tier firms can easily submit the restructuring plan accordingly.

Reorganization Strategy

This act also gives the court the right to approve the reorganization plan over any objection of the creditor.

A trustee’s Appointment

Besides the above-mentioned plants, this act also offers an appointment of the trustee for the low-tier firm debtor. The trustee should help the debtor develop the reorganization strategy, thereby facilitating the reorganization of the debtor and monitoring the reorganization plan’s fulfillment.

Postponed payment of the administrative expense

The debtor does not necessarily have to pay the administrative claims, such as claims incurred for the post-petition services or goods, on the effective date of the plan.

Residential Mortgage Modifications

It does not apply any prohibition against the small business debtors for modifying the residential mortgages. The fact is that the small business debtor may modify the mortgage secured if their loan has been connected with their business. Also, the loan must not be used earlier for acquiring a residence.

Discharge restrictions

The court may grant the discharge to a debtor once it pays all the due payments within a span of 3 years or longer as the court determined. The discharge releases the debtor of the debt liability under this plan with a few exceptions.

If you think your small business needs to file for bankruptcy, it’s time you get in touch with an attorney to understand the complexities associated with it beforehand.