How Local Bankruptcy Laws in Maryland Protect a Crumbling Business?

by John Fostar Media Releation

When a business is in deep financial trouble, the owner can file for bankruptcy. He/she can either shut down the business and liquidate assets to pay debts, or reorganize debts in a way that he or she can pay them while running the business.

A business owner may choose from three kinds of bankruptcy, depending on the business structure.

Sole proprietorship

In sole proprietorship, the business owner is accountable for all liabilities and assets of the company. Commonly, sole proprietors choose chapter 13, which allows them to reorganize their debts and still run the business.

Partnerships and corporations

Partnerships and corporations are legal business structures, which are separate from the owners. Commonly, such businesses file for bankruptcy under Chapters 7 and 11.

When in Maryland, it is important to know local bankruptcy laws in Maryland before you file here. Each state has a set of laws. It is a good idea to hire a bankruptcy lawyer because they are experts in this field. They can guide you in the choice of chapters and in the entire legal proceedings.

A shield for new businesses

You will be surprised to know the huge number of individuals and businesses that file for bankruptcy every year. The year 2020 has seen an even larger number of people and companies choosing this last resort in finances. This is mostly the consequence of country-wide lockdowns that happened globally due to the novel Coronavirus pandemic.

Small Business Reorganization Act

The US Congress passed the Small Business Reorganization Act 2019 in August 2019. The President had signed it to form a law.

In February 2020, a new subchapter V of the bankruptcy Chapter 11 came into effect.

This subchapter seems to be in the favor of business owners filing for bankruptcy. The applicant has a choice to apply for this subchapter.

For instance, the subchapter does not mandate the approval of creditors in the court plan. This means you need not present your plan to a committee of creditors.

These and other such clauses in various chapters of bankruptcy give you certain benefits. However, not every person is aware of the bankruptcy laws, amendments in the law, and inclusion of new subchapters.

A good small business bankruptcy lawyer in MD is aware of all these.

That’s why it is smart to consult a lawyer before you file for bankruptcy.

Financial trouble is not all about money. It also accompanies emotional turmoil. So, chances of making hasty and wrong decisions are high.

You need to be practical, which may not be possible when you are under stress of piling debts and crumbling finances.

In some cases, even filing for bankruptcy may not be a good option for you.

A competent bankruptcy lawyer by your side not only guides you in choosing the right option, but also enlightens you about local bankruptcy laws in Maryland. He or she may help you explore other options. And if bankruptcy is the only way in your case, the lawyer would guide you on how to file in the most beneficial manner possible.

Resource Box:

Rnnlawmd.com presents small business bankruptcy lawyers in MD. Visit the site to know about local bankruptcy laws in Maryland and to find a competent lawyer for your case.