As a small business owner in Oregon, one of the last things you want to deal with is the decision of what kind of bankruptcy to declare. However, if you are at a point where you are unable to pay off your debts and risk losing your business, Chapter 11 bankruptcy may be a feasible option.
Under Chapter 11, a business owner comes up with a plan of reorganization, allowing him or her to propose a new way of operating and a plan to pay off creditors. The primary advantage this offers is that it allows you to keep your business and may even give you the needed space to pay off your debts.
Stay of collection
Forbes indicates that one of the advantages to declaring Chapter 11 is that it can put a stay on any collection attempts against you and your business. This is intended to allow business owners the opportunity to effectively reorganize.
Expect to make sacrifices
Filing bankruptcy is still going to be a permanent change to how your business proceeds. You can expect to have to terminate some of your contracts while keeping others that will remain obligations for you to pay as the debtor. One nice thing about this process is you will have control over which contracts to keep and which ones to reject.
Beware of creditor relief
You may not necessarily be able to keep a stay on all of your debts. Certain creditors can apply for relief in certain situations, and if this is granted, they can continue to prosecute you for any of their claims.
This article is meant to inform and is not intended as legal advice.