Thinking about practicing business bankruptcy law? Now is a great time to start, as more small businesses are closing because of the pandemic and will be seeking financial relief. Adding bankruptcy to your practice means you can help more of these clients in need, a number that will only continue to grow. Over 100,000 small businesses in the U.S. have already closed permanently.
When you’re looking for resources on starting your business bankruptcy law practice, here are a few insights to get you started.
Types of business bankruptcy cases
There are a few common bankruptcy chapters that businesses can file to find financial relief. Here are more details about each:
- Chapter 7: This is the liquidation bankruptcy. A business’s assets are liquidated to pay off creditors, and their debt is discharged. This is ideal for businesses who are beyond the point of restructuring their debts.
- Chapter 11: A Chapter 11 bankruptcy is the reorganization option. This type of filing is for partnerships and corporations, and allows them to reorganize debt and continue operating. This is a good option if a business still has potential to turn things around.
- Chapter 13: Finally, Chapter 13 bankruptcy is another reorganization option that’s usually filed by individuals with regular income, but can also be used for sole proprietorship businesses. This chapter could become more common since more Americans are starting their own contracting or freelancing businesses.
Chapter 11 and 13 bankruptcies allow businesses to restructure debts so that they can afford to make payments each month, without having to lose assets, as in a liquidation bankruptcy.
Sometimes, a solution can be made outside of court, known as a business or corporate workout. This means that a company is able to get on top of its debts and turnaround its financial issues without filing for bankruptcy.
How attorneys can help
As an attorney, it’s important that you step in and help clients in need, especially as the country faces a severe economic recession because of COVID-19. Consider adding business bankruptcy law to your practice so you can assist distressed businesses within your community.
While we haven’t seen a huge increase in bankruptcy filings as of yet, impacted businesses and individuals are likely to seek relief in the coming months and years.
Allow NextChapter to help you with your new business bankruptcy law practice. NextChapter is a cloud-based business bankruptcy software and assists attorneys with client communication and intake, helpful case management tools, and an option to work with a virtual paralegal on an on-demand basis.
Sign up for NextChapter today and start helping businesses in need of bankruptcy services.