Albuquerque Bankruptcy Attorney
Unfortunately, Chapter 11 and Chapter 13 are terms that more business owners in Albuquerque are having to come to terms with in recent times.
Bankruptcy has become a new and unfortunate reality as the economic downturn sets in.
As experienced Albuquerque bankruptcy attorneys, Legal Solutions of New Mexico can help you navigate these tough times and come out the other side with a brighter future. If you have any questions regarding bankruptcy laws, please contact Legal Solutions of New Mexico at (505) 445-4444 or book a consultation online.
Bankruptcies for businesses
In order to stave off demands from vendors, creditors, tax collectors and other parties, bankruptcy provides some legal protections.
At the very least, it provides breathing space so that you can negotiate a future path out of debt. It provides a chance to rebuild your business.
Some businesses are left with little option – but there are different forms of bankruptcy that will greatly affect your future and the future of your business.
It’s important to understand what options are available to you.
In order to do this effectively, most business owners require legal assistance from a bankruptcy attorney.
Bankruptcy is complex. Never file for bankruptcy until you have first explored all options with your attorney. Whether bankruptcy is right for you depends on many factors and there may be other alternatives you can consider.
Note that legally in New Mexico, you must receive credit counseling from an approved agency before filing for bankruptcy. There is also a filing fee to pay.
If the circumstances are right, your bankruptcy attorney will most likely present two main options to you:
Chapter 11 bankruptcy is generally used by businesses with high debt loads but some high-net-worth individuals with large debts can also use this mechanism to reorganize debt repayments to creditors.
A business of any size can file for Chapter 11. However, creditors can also initiate a Chapter 11 filing against your business (an “involuntary petition”).
Once bankruptcy is filed, the business starts proceedings for repayment and restructuring plans.
In most cases, a business that opts for Chapter 11 will be indebted to multiple creditors who are aggressively pursuing what you owe them.
By filing for Chapter 11, you hope to return your business to profitability in the future. Your business has prospects and a good customer base.
However, returning it to a healthy state requires considerable expertise in restructuring and debt reorganization.
That’s where an experienced bankruptcy attorney will be able to guide you through this complicated and often-stressful process.
Chapter 13 is also known as “reorganization bankruptcy”.
Like Chapter 11, it provides your business with a chance to recover from its debt problems and prepare for the future. It is probably the most common form of bankruptcy in Albuquerque.
The main difference between Chapter 13 and Chapter 11 is the involvement of the court in arranging a debt repayment plan.
With Chapter 11, as you have seen, your bankruptcy attorney works with you to reorganize and restructure.
With Chapter 13, a court-appointed trustee will be in control of bankruptcy proceedings and will work on a tailored plan for the distribution of your income to creditors over a three-to-five-year period. Outstanding debts remaining after the stipulated period will be forgiven.
However, there are other differences between Chapter 13 and Chapter 11. Most notably, only individuals with stable incomes and specific debt limits are eligible for Chapter 13 while Chapter 11 is open to almost any business or individual.
If your income is too high or too low to meet the proposed monthly payment obligations, you may be ineligible for this type of bankruptcy.
One of the main advantages of Chapter 13 bankruptcy is that you can keep assets like a car or a home.
You may be a candidate for this type of bankruptcy if you:
- Have a large tax debt that can be paid off over time
- Are behind on loan payments and wish to repay over three or five years
- Sincerely want to pay your debts but need legal protection to do so
- May need to file for Chapter 7 bankruptcy in the future
Note that, with Chapter 13, you will still require an Albuquerque bankruptcy attorney to liaise with the court trustee and make sure that the repayment plan is executable for you.
A brief note about Chapter 7 bankruptcy
With Chapter 7 bankruptcy, a trustee is appointed to take the nonexempt property, sell it, and use the proceeds to pay your creditors. It effectively cancels all debts at the end of the procedure.
This form of bankruptcy is used when a business is looking to dissolve rather than to return to profitability. Strict guidelines apply to eligibility.
Get help with debt problems and bankruptcy
With debt problems, there is no one-size-fits-all solution.
Before filing for bankruptcy, sit down with one of our experienced bankruptcy attorneys in Albuquerque and discuss your situation.
We will carefully review your business and analyze your business structure to advise you on your options with either Chapter 11 or Chapter 13 bankruptcy – or an alternative option.
We will also help you liaise with the banks, vendors, and other creditors on a plan for debt repayment.
Our aim is to help you reach a satisfactory conclusion that positions your business to overcome your debt problems and rebound.
Start with an initial consultation. Call Legal Solutions of New Mexico at 505-445-4444 or book a consultation online.