What is “pre-bankruptcy planning” in a Chapter 11 bankruptcy?

Pre-bankruptcy planning in a Chapter 11 bankruptcy is a strategy utilized by debtors before filing for bankruptcy to streamline the process of restructuring their debt. This planning may include liquidation of assets, or the selling of property, in order to pay off or reduce debt. It can also include negotiation with creditors to adjust or reduce debt and repayment terms to make them manageable. Another pre-bankruptcy planning strategy includes the establishment of a trust, which would move assets out of reach in the event of a bankruptcy case, allowing the debtor to secure their assets while restructuring their debt. Pre-bankruptcy planning is important for debtors in a Chapter 11 bankruptcy because it can make the entire process more efficient and cost-effective. By negotiating with creditors before filing for bankruptcy, debtors can reduce the costs associated with the filing process, and in some cases, result in a more favorable outcome for the debtor. Pre-bankruptcy planning also allows the debtor to remain in control of their financial restructuring and avoid the loss of control that comes with having their debt restructured by a court. Virginia residents who are considering filing for Chapter 11 bankruptcy should be sure to consult an experienced bankruptcy lawyer for advice on pre-bankruptcy planning. A lawyer can help assess the debtor’s financial situation and suggest the best plan of action to make debt more manageable. Additionally, an attorney can provide information on the legal aspects of filing for bankruptcy in Virginia.

Related FAQs

What is “pre-bankruptcy planning” in a Chapter 11 bankruptcy?

Related FAQs

Related Blog Posts