News stories often describe how large national corporations or sizeable regional businesses have entered into Chapter 11 bankruptcy because of their financial problems.
The coverage could leave the leadership of a smaller business in New Jersey with the impression that no formal relief is available to them and they may just have to close up shop and live with the consequences.
Such is not in fact the case. Businesses who are having financial trouble should consider whether bankruptcy can offer them relief.
Chapter 13 may be an option for individual business owners
In fact, if the owner’s financial troubles are primarily due to business debt, they may get the benefit of a more favorable and flexible monthly payment plan.
In any event, as part of the Chapter 13, the debtor can agree to repay all or a portion of business debts over time and then receive a discharge from any outstanding balance.
Smaller businesses may also avail themselves of Chapter 11
While it might not get as much attention in the process, smaller businesses can, and frequently do, file Chapter 11 bankruptcies as well. By law, the process may work differently when a smaller business enters Chapter 11, but, overall, the goal is still for the business to reorganize its affairs and come out of the bankruptcy able to earn a profit.
A Chapter 11 will generally be a good option for corporations, but individual business owners may use it as well in some circumstances.