Many businesses are struggling as a result of the coronavirus pandemic and need help to survive. Fortunately, filing for bankruptcy can help. Temporary changes to bankruptcy qualifications now allow more businesses—companies both big and small—to qualify for Chapter 11, Subchapter V.
So what is Chapter 11, Subchapter V? It’s a reorganization bankruptcy that lets a business restructure debt—often lowering it to match the company’s reduced income stream. Because it works like a Chapter 13, it’s simpler, easier, and most importantly, cheaper to use than the traditional Chapter 11 bankruptcy.
But that’s not the only benefit. Because Chapter 11, Subchapter V procedures are similar to those used in Chapter 13, you’ll find more experienced bankruptcy attorneys qualified to represent you. Instead of being limited to high-priced, court-approved Chapter 11 attorneys (not many exist), you’ll be able to rely on an experienced, yet less pricey Chapter 13 lawyer. Just keep in mind that there are still far fewer attorneys who regularly practice Chapter 13 than Chapter 7, so give yourself time to find and hire the right bankruptcy lawyer.
If your business has already closed and you need help getting out from under business debt, filing for Chapter 7 bankruptcy will likely be the better choice. But before you put your business in Chapter 7, did you know that it often makes more sense for the business owner to file for Chapter 7 personally? If you qualify, you’ll be able to wipe out personal and business debt in the same case.
To brush up on the basics, start by reading Bankruptcy for Small Business Owners: An Overview.