Small Business Bankruptcy Attorney in Birmingham, Alabama
Many businesses across the United States have been impacted by the business shutdowns and economic fallout as a result of the coronavirus pandemic. If your business is struggling financially or overwhelmed with debt, filing for bankruptcy is among the promising options to achieve debt relief. An experienced Alabama bankruptcy attorney can enlighten you on the different bankruptcy options available for small businesses and help you navigate key decisions.
At Clark Law Firm PC, Attorney John Clark is dedicated to offering experienced legal services and knowledgeable guidance to small business owners in bankruptcy-related matters. John is available to discuss your unique financial situation and help you understand your possible legal options. Whether you are trying to file for Chapter 7, Chapter 11, or Chapter 13 bankruptcy, John can offer you the detailed legal counsel and reliable advocacy you need to make informed choices and seek financial relief.
Clark Law Firm PC proudly serves clients across Birmingham and surrounding areas throughout Alabama and the Florida Panhandle.
What to Consider When
Filing for Bankruptcy
Seeing your business struggle—a business that you've built with several years of financial sacrifice, hard work, and dedication—can be upsetting. When your small business is going through a difficult financial situation, filing for bankruptcy can help you achieve debt relief and give you enough time to restructure your business.
To make informed choices, you must consider a variety of factors, including business entity/structure and your plan for the business going forward. Here's how each factor may impact your bankruptcy filing decision.
Your business structure often determines the type of bankruptcy chapter available to you. These include:
Sole Proprietorship – In a sole proprietorship, the sole proprietor (or business owner) maintains complete control over the business. The business owner will receive all profits and pay taxes. However, both the sole proprietor's personal and business assets are exposed to debts or liability.
Partnership – A partnership involves two or more persons coming together to do business. Each partner contributes property, money, skill, or labor, and shares in the business profits and losses. In a partnership, the partners are held liable for the business debts, liabilities, as well as actions of the partners.
Limited Liability Companies (LLC) – Unlike sole proprietorship and partnership, the LLC offers asset protection to its members. LLC members will not be held personally liable for company debts and liabilities.
Corporations - Similar to LLCs, the corporation offers personal asset protection to its members. Corporate shareholders will generally not be held personally liable for company debts and liabilities.
Plan for the Business Moving Forward
Additionally, the plan for your business moving forward may also influence your choice of bankruptcy. To decide on the right bankruptcy chapter, ask these crucial questions:
Do you intend to liquidate business assets and close the company?
Do you intend to keep running the business while you reorganize?
Is suspending or continuing business operations a good idea?
Your answers to these questions and more can help determine the bankruptcy chapter that is right for your small business.
What Are Your Bankruptcy Options?
The most common bankruptcy options available to entrepreneurs and small business owners in Alabama include Chapter 7, Chapter 11, and Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy or "liquidation bankruptcy" is designed to help individuals and business owners experiencing financial distress eliminate most of their general unsecured debts. The Alabama courts will appoint a trustee—an independent person—to oversee your bankruptcy case.
The trustee will collect and sell your non-exempt assets—assets and property that can be sold in a Chapter 7 case. These could potentially include your vacation homes, additional cars, bonds, second homes, stocks, family heirlooms, and other investments. The trustee will use the proceeds from the sale of non-exempt assets to repay some or all of your creditors.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy, also referred to as "reorganization bankruptcy," can help businesses restructure their affairs, assets, operations, and debts. It requires the business owner (the debtor) to propose a repayment plan to the creditor. Through the repayment plan, the business owner can repay the debts using potential earnings while keeping the company afloat.
Chapter 11 usually works best with LLCs and partnerships. However, a major drawback is that filing your case under Chapter 11 of the U.S. Bankruptcy Code could be time-consuming and expensive. Moreover, both the court and the creditor must approve your proposed repayment plan. However, with the passage of the new Small Business Reorganization Act of 2019, which created a new "small business" type of Chapter 11 bankruptcy, a Chapter 11 bankruptcy may now be much more affordable for small or medium-sized businesses.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, commonly referred to as "wage earner's bankruptcy," is available to individuals and small business owners who earn a reasonable income but are overwhelmed with debts. Under Chapter 13, the debtor will propose a structured repayment plan to the creditor to pay back their debts using their future income over three to five years. By filing for Chapter 13 bankruptcy, you can retain your assets and property, including your home, cars, personal belongings, and other business assets.
How Legal Counsel Can Help
Filing for small business bankruptcy in Alabama is a huge decision that requires thorough assessment. Understanding the requirements, determining your eligibility, filing your court forms, and attending court proceedings can make the entire process daunting and overwhelming. When considering filing for small business bankruptcy, you need to speak with a knowledgeable bankruptcy attorney to explore your options.
Attorney John Clark has the experience and diligence to guide clients through the complicated small business bankruptcy procedures in Alabama. As your legal counsel, he can help you understand the benefits and drawbacks of each bankruptcy chapter and decide the right option to help your business achieve financial relief. John will work diligently with your creditors to negotiate a feasible debt resolution or create a repayment plan that works best for you.
Small Business Bankruptcy Attorney in Birmingham, AL
If you're a small business owner considering filing bankruptcy, contact Clark Law Firm PC today to schedule a simple case assessment. John can offer you the detailed legal counsel, support, and strong advocacy you need in your bankruptcy case. The firm is proud to serve clients across Birmingham and surrounding communities throughout Alabama and the Florida Panhandle.