To do this, the business will file a voluntary or involuntary petition with the bankruptcy court —voluntary petitions are filed by the debtor, whereas involuntary petitions are filed by the creditors, but not until after certain criteria have been met. Generally speaking, the debtor will then have about four months to establish a reorganization plan for going forward. If it sees fit, however, the court may extend this period to up to 18 months. The purpose of the reorganization plan is to prioritize certain debts and creditors by placing them into different classes.
Unsecured claims, for example, would be in their own class. If you believe that filing Chapter 11 bankruptcy may be the best option for your business, it is in your best interest to speak with an attorney who specializes in bankruptcy law. There are exceptions to the guidelines above, however. For example, time requirements may be reduced if you paid percent of unsecured claims or 70 percent in a good faith plan in your Chapter 12 or 13 bankruptcies. On the other hand, Chapter 11 and 12 guidelines might not be as easy and straightforward as stated above if you violated a court order or had a case dismissed during the days preceding your bankruptcy filing.
In either of these situations, you may not immediately qualify for another discharge. According to Dean A. Langdon of DelCotto Law Group in Lexington, Kentucky, costs and credit issues often prevent businesses from filing bankruptcy over and over again.
It could then file another Chapter 11 bankruptcy and get rid of any new debts by having a new plan approved. While this could happen several times over the life of a business, it rarely happens more than two or three times because of the expense and inability to get credit after several bankruptcies. More In File. Discharge If you successfully complete your bankruptcy plan you will receive a discharge of debt.
General Tax Questions Please note: We cannot provide legal or other advice about your bankruptcy case. If you want to speak to someone at the IRS please call: Individuals — Businesses — Related Topics Declaring Bankruptcy. Filing Past Due Tax Returns. Page Last Reviewed or Updated: Mar Share Facebook Twitter Linkedin Print. Nondischargeable Debts Payroll Taxes, Domestic Support, Etc : Chapter 11 can give an individual the time needed to properly reorganize their affairs for liabilities considered nondischargeable under the bankruptcy code.
Nondischargeable means the debt will not be wiped out in bankruptcy. Among the debts that will survive bankruptcy are payroll taxes. Payroll taxes are serious business, and if your business fails to pay these taxes, you can be held personally liable. Fortunately, filing Chapter 11 will stop any penalties and fees from accruing on these unpaid taxes, and your attorney can work with the IRS to structure a repayment plan or settlement offer that you can afford.
If you want to talk more about the benefits of filing an individual Chapter 11 bankruptcy, call Atlanta bankruptcy attorney Will Geer at Individuals Can File Chapter 11 Too Chapter 11 is not just for small businesses and large corporations suffering insurmountable debt problems.
The Benefits of Filing an Individual Chapter 11 Historically, individuals filed Chapter 11 bankruptcy when they exceeded the debt limits of Chapter Contact Us for Help!
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