As the owner of Brown Law Firm in Tulsa, bankruptcy attorney Ron Brown says he frequently comes into contact with people who think that filing for bankruptcy is going to be an easy, quick task just because they have heard about businesses doing it on the news. Unfortunately, that is hardly the case.
In current economy, it seems that thousands of companies across the country are filing for bankruptcy every day. So many people wrongly assume that filing for bankruptcy as a corporation must be easy. While it is true that many companies that were riddled with debt did end up filing for bankruptcy during the recession, that does not necessarily mean that the process is easy, whether you are filing as a Fortune 500 company or an individual with excessive debt.
Chapter 11 Bankruptcy
You tend to hear about the big name companies filing for Chapter 11 bankruptcy just because their debt loads are so high and they need to restructure those debts. But that doesn’t necessarily mean that the restructurings they are going through are easy.
For most large businesses, a Chapter 11 bankruptcy is the preferred filing type. Like a Chapter 13 bankruptcy, which is one of the more common types of filings for individuals and families, a Chapter 11 requires that the company filing for bankruptcy make an effort to restructure its debts and find a way to pay them back. By filing for a Chapter 11, these companies are essentially trying to restructure their debts so that they can get rid of many of the bills that they have and pay back their creditors at pennies on the dollar.
On the other hand, shareholders can often make the process of filing for bankruptcy more difficult for companies. Large companies typically have shareholders who stand to lose some of the value of their stocks, or lose the complete values of their shares, when a company files for bankruptcy. That is probably the real reason why people are on the news talking about big companies filing for bankruptcy so frequently—because their shareholders are upset about losing money, so the news stations and newspapers are reporting it.
Chapter 7 Bankruptcy
Besides a Chapter 11 bankruptcy, businesses also have the option of filing for Chapter 7 bankruptcy. But filing for a Chapter 7 means that the company would have to go out of business and have all of its assets sold. Therefore, most companies would prefer to restructure their debts and go with a Chapter 11 instead.
Credit Counseling Courses
When it comes to filing for bankruptcy, one time-saving element that companies have in their favor is that they do not have to go through any of the credit counseling courses that individuals filing for bankruptcy are required to pass. Any Tulsa bankruptcy attorney is going to require his or her clients to take these courses, because they have been a requirement for individual filers since the passage of the Bankruptcy Reform Act in 2005.
Completing the credit-counseling requirement is time-consuming but also helpful. Individuals and couples who are filing for Chapter 7 or Chapter 13 bankruptcy must have two credit counseling courses—a pre-filing course and a post-filing course. The former is just a credit counseling course that is intended to look at your credit and find out whether filing for bankruptcy is truly unavoidable. The latter, which is taken after the filing is completed, is more of a debtor’s education course—it is meant to give debtors some tips and tricks to live by in their new debt-free lives.
From business owners to families, I believe everyone should go through some type of debt education course at some point in his life. In the past, there were a lot more people who were filing for bankruptcy and then going right back to their old habits. So I think learning the inclusions of these courses is definitely a good thing.
Remember that going through bankruptcy is no easier for a large business or corporation than it is for an individual. For people who might be drowning in debt and unsure of where to turn, it’s a good idea to find a qualified bankruptcy attorney in Tulsa, like myself, who can take a look at the situation and recommend the best course of action.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.