The First Steps You Will Take When Filing for Business Bankruptcy

Understanding the Difference Between Secured and Unsecured Debts

The First Steps You Will Take When Filing for Business Bankruptcy

One of the first things that you should know about business bankruptcy is that it is a process. You might expect that bankruptcy isn’t a huge deal to the courts because they handle so many cases every day, right? However, these many steps are taken seriously and so you want to ensure that your Texas business bankruptcy process is handled right from the very start. Today, we want to take a closer look at the first steps you will take if you are filing for Chapter 7 or any other type of business bankruptcy.

Before Filing for Business Bankruptcy in Texas 

Many people believe that the bankruptcy process is as easy as going to the courthouse and filing. However, before you even go through the process, you will be told to complete a credit counseling program with an approved agency, which should take place approximately six months before you file for bankruptcy. It is important to take steps as soon as possible before you begin the process so that you are well-prepared.

Steps to Take in Your Business Bankruptcy  

Filling Out Forms: There are various forms that you will have to file out to get started on the business bankruptcy process. If you are looking to file Chapter 7, you will have to file what is known as the “voluntary petition,” which will outline specific aspects, such as your property, debts, and all of your creditors and their information. You will also need to tell the courts how you plan to deal with your debts by taking various steps.

File with the Courts: You will have to file all of your forms with the courts during this next step. Once you file the voluntary petition, your debts and property will be turned over to the court so that you will find out the next steps and all will be secured. You will not be permitted to pay off any debts now without court approval.

With this comes something known as the “automatic stay,” which is one of the most important effects of a bankruptcy filing. Having an automatic stay means that creditors will automatically be unable to take any action against you, such as wage garnishment, repossession, and other steps that could leave a negative impact on your life. 

The First Steps You Will Take When Filing for Business BankruptcyMeeting of Creditors: After you have officially filed for bankruptcy, you will receive a notice for what is known as the “meeting of creditors.” The meeting of creditors might sound frightening and complicated but it is simply used for creditors to ask you questions about your specific finances and paperwork you have filed. In some cases, creditors will not even show up for the meeting, but you should prepare for them to be there. 

Discharge: If creditors do not file a lawsuit within 60 days to go to bankruptcy court, your case will simply be discharged. This means that you will no longer owe your dischargeable and unsecured debts. If the next option is going to court, however, you will need an experienced attorney on your side to help you defend your rights at this time.

How a Texas Business Bankruptcy Attorney Can Help 

If you have decided to take the steps to file for Chapter 7 bankruptcy in Texas, you have many rights and protections under the law and should understand the many aspects that come into play in these cases. If your situation is dire enough for you to qualify for a Chapter 7 bankruptcy, it might be time to speak to an experienced bankruptcy attorney in your time of need. Please speak with us at MJ Watson & Associates at (214) 965-8240 for more information.

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