Seeking Chapter 11 bankruptcy protection allows a business, an individual, or a married couple to make their own plan for repaying creditors while continuing to operate as close to normal as possible. Going through the process is expensive and complicated, so seeking advice and representation from an experienced Columbus, Ohio, Chapter 11 bankruptcy attorney will help.
People and corporations whose monthly debt payments exceed their monthly incomes generally have three options for declaring bankruptcy under federal law:
The first step toward securing Chapter 11 bankruptcy protection in Ohio involves filing a formal petition with a U.S. federal district court. Chapter 11 rules require the petitioner to submit the paperwork in the court nearest to an official domicile, which translates to working through the court closest to the company’s headquarters or the house that the individual or couple live in a majority of the time.
In Ohio, federal district courts that handle Chapter 11 cases are located in Akron, Canton, Cincinnati, Cleveland, Columbus, Dayton, Toledo, and Youngstown. A Columbus bankruptcy lawyer who is licensed to practice in Ohio can help with a case started in any of those cities.
The Chapter 11 bankruptcy petition must include the following information:
The court will require individuals filing for Chapter 11 Bankruptcy to include business balance sheets and tax returns with the Chapter 11 bankruptcy petition. Individuals or married couples must also document completion of credit counseling and submit any debt management plan created during that counseling. Other forms and reports are required depending on the identity of the petitioner, so preparing the initial filing with assistance from an Ohio bankruptcy attorney will ensure no details that could derail the bankruptcy at the very beginning get missed.
Once the court accepts the Chapter 11 bankruptcy petition, all debt collection actions stop. Creditors must temporarily lift or stop liens, lawsuits, and repossessions. This stay remains in effect until a debt repayment plan is approved by the court and accepted by creditors. The business, individual, or couple who filed the bankruptcy petition must submit regular reports on income with the court while the stay is in place, and debtors can request partial lifts of the stay when the debtor’s financial situation improves considerably.
Having their petition for Chapter 11 bankruptcy protection accepted by the court gives the debtor 120 days to submit a detailed plan for restructuring and repaying debts. The plan usually asks creditors to lengthen contracts, accept lower installment payments, and settle for less the full amounts due. Creditors vote on the plan and can challenge particular provisions in court. Having the plan fully approved by the bankruptcy court can take months and require multiple hearings. For this reason, the U.S, Court’s main webpage on Chapter 11 bankruptcy emphasizes that a debtor “can employ attorneys, accountants, appraisers, auctioneers, or other professional persons to assist” during the case.
A court-appointed trustee oversees implementation of the debt repayment plan. Failing to fulfill the terms of the new repayment agreements accepted by creditors can result in new collection efforts and lawsuits. Also, a business, individual, or couple under Chapter 11 bankruptcy protection does not have full authority to sell property and possessions on which loans were taken, can have problems accumulating cash reserves, and needs to pay quarterly administrative fees. An ethical Ohio Chapter 11 bankruptcy attorney will ensure that his or her client fully understands the potential benefits and risks of seeking this form of financial protection.
The Calig Law Firm has helped individuals and corporations all across Ohio go through the bankruptcy process and return to solvency. You can schedule an appointment with one of our Columbus Chapter 11 lawyers by calling us at (614) 252-2300 or connecting with us online.