Bankruptcy Indiana

Small business bankruptcy in Indiana has been the subject of a lot of discussion lately, including in my Indiana bankruptcy blogs last week. Those blog posts triggered quite a number of questions from readers wanting to know more.  While Chapter 13 and Chapter 7 bankruptcy is what readers usually ask about, there has been particular interest in Chapter 11 bankruptcy as a way to try to keep a business going and give it a fighting chance to recover from the recession.

One reader has posed a question I believe might be of interest to other readers and clients.  She is trying to make a decision between two things:

• Filing Chapter 11 bankruptcy for her small business (like Chapter 13 bankruptcy in Indiana for individuals, Chapter 11 for businesses is based on a debt repayment plan)
• Using the services of a debt management consultant.

Since I am not familiar with all the details of this bankruptcy blog reader's situation, all I can do is offer some general facts from my more than twenty years' experience as a debt consolidation lawyer and Indianapolis bankruptcy lawyer, as well as from the experience of the Columbus bankruptcy lawyers who work in my office in that city.

From the question itself, I can surmise some possible factors in this business owner's predicament:

• The business is having financial difficulties.
• She would prefer to explore options to continue, rather than close her business.
• She believes that the difficulties are temporary and can be overcome in the long run
• She wants to buy time to make the decision whether to close or not.
• She's already decided to sell her business, listing it with a business broker, but the high level of debt is too strong a negative for buyers.

Certainly negotiating with lenders is a step any business owners need to explore.  What I've found, over the many years of working with creditors and debtors is this: Some creditors are willing to accept even dramatic reductions in repayment, because they perceive they'd still be getting more, and sooner, than they would if the debtor small business filed a Chapter 11 bankruptcy case that could drag on for years.

On the other hand, small business owners themselves need to have a realistic perception about new bankruptcy laws in Indiana and in particular what Chapter 11 small business bankruptcy can and can't accomplish.

As Debbie White correctly explained on Buzzle.com,
"This form of small business bankruptcy is not designed to be a debt absolution plan, as many people erroneously think.  Chapter 11 small business bankruptcy is actually designed as a quite stringent plan in which a conservator is appointed to take charge of the business assets to apply them to the repayment of all the business debts."

One positive and important thing that any bankruptcy accomplishes is that it offers relief from creditors' collection attempts.

Whenever it comes to answering a question that begins with the words "Which is better…?", you can be sure that, until I've met the client and learned all the details of the situation, my answer is almost certainly going to be "It depends!"