Chapter 11 bankruptcy is often an alternative for Idaho companies that want to reorganize their debts without having to close. It may also be used for individuals who have too much debt to qualify for Chapter 13 protection. While filing for Chapter 11 protection may bestow a number of benefits to those who seek it, there may also be pitfalls to consider before deciding if doing so is in your best interest.
The potential benefits of filing for Chapter 11 protection
One of the primary benefits of filing for Chapter 11 protection is that you might get a stay against creditor activities. Even if you don’t get a stay, creditors may be willing to work with you because filing for Chapter 11 protection means that you’re more likely to pay your debts in full or closer to full. Furthermore, if you’re looking to reorganize corporate debts, seeking Chapter 11 bankruptcy may allow you to continue making money that can be used to repay existing debts.
The potential downfalls of Chapter 11 bankruptcy
Seeking Chapter 11 protection from creditors is often a lengthy and costly process for both businesses and individuals alike. In addition, a judge has to approve a proposed reorganization plan before it can go into effect. If you don’t propose a plan in a timely manner, your creditors may be able to do so instead.
Filing for protection from creditors may be an ideal way to get out of debt or get a better handle on existing balances. It may also allow you to cut costs or otherwise restructure your company so that it is more competitive on the open market. This may make it easier to generate enough revenue to pay off existing debts or generate the revenue needed to avoid another financial hardship.