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Qualifications for Subchapter 5
To qualify for a Subchapter V case, you must be engaged in commercial or business activities with total secured and unsecured debts of no more than $7,500,000 as of the date of filing. At least 50 percent of these debts must have come from your commercial or business activities. However, if your business’s primary activity is owning and running a sole property, you are not eligible for Subchapter V bankruptcy
Benefits of Subchapter 5
Several benefits exist for smaller businesses seeking a Subchapter V bankruptcy case, including the following:
- Business remains in operation. During the Subchapter V case, you will be able to keep your business open, remaining the owner, if you continue to follow the repayment plan approved by the court.
- Creditor approval is not needed. In a normal Chapter 11 case, your creditors must vote to approve your repayment plan. In a Subchapter V case, the approval is not needed for the court to confirm your reorganization plan. This elimination cuts a lot of time out of the process since the creditor approval requirement can involve a lot of back-and-forth negotiations.
- Only the business can file a plan. Also in a normal Chapter 11 bankruptcy case, creditors are allowed to submit plans on your behalf, and these can be approved by the court. In a Subchapter V case, you retain control over the process, and only you can submit a repayment or reorganization for your business.
- Detailed disclosures are not needed. In a Chapter 11 case, you must submit a very detailed disclosure statement to the bankruptcy court. This disclosure includes a breakdown of your business and its finances to see if you can repay your creditors. This detailed disclosure is not required for a Subchapter V case.
- Special trustee appointed. A bankruptcy trustee is not always needed in Chapter 11 cases, but a special trustee will be appointed to help you in keeping your business open and running throughout the case. The trustee also makes recommendations to the court regarding confirming your reorganization plan.
- Administrative fees may be paid in installments. The fees needed to start a Chapter 11 case can be a lot, and they normally must be paid in full before your reorganization plan can be confirmed. In a Subchapter V case, however, you are allowed to pay these fees over the course of the plan.
The Subchapter V Process
Following the filing of your petition for bankruptcy, the bankruptcy court will hold a status conference within 60 days of filing to determine how your case will proceed. With a Subchapter V plan, you must submit your reorganization plan within 90 days of filing for bankruptcy, which is a much quicker process than standard Chapter 11 cases. Your plan should be quickly approved so long as the court sees that you have allocated enough money towards your repayment plan.
You will retain complete control over your business, even if your repayment plan does not fully pay your unsecured creditors. Your plan can also be approved by the court even with the objections of your creditors.
You should expect to work with an appointed bankruptcy trustee during your Subchapter V case. Their role is like that of a Chapter 13 trustee. They oversee your plan and ensure that everything is moving smoothly in accordance with what the court has approved, including making sure that payments are made under the plan. They also may appear at any major hearings and can investigate your conduct, including your assets and debts.
Subchapter V cases tend to move much quicker than a traditional Chapter 11 case, which can take years to successfully complete, which is yet another reason small business filers find this type of bankruptcy more appealing.
If you are a small business struggling with debt, call us today to schedule a free consultation. The Benenati Law Firm has eliminated nearly a billion dollars of debt for its bankruptcy clients, making the firm one of the top twenty filers of bankruptcy in the nation. We have helped thousands of individuals and businesses eliminate their debt and get a fresh start financially. The day you hire our firm, we will contact your creditors to stop the harassment and collection calls. We make our hours convenient for our clients and offer FREE digital sign-ups and consultations on Saturdays (9:00 a.m. – 3:00 p.m.) and throughout the week until 5:00 p.m. If you or your business are in a financial crisis and considering filing for bankruptcy, contact an experienced Orlando bankruptcy attorney who can advise you of all of your options.
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“I was very hesitant to go through the procedure of bankruptcy, especially at this late age of my life of the close to retirement years. Going through difficult personal health and family events made this very hard, yet every person I came in contact at the Law offices of Attorney Walter Benenati made me feel at ease. They were always quick to answer any questions. Even one time I was shocked I emailed the office and not even a couple of minutes later the attorney called to answer my question. My 17 year old son, was next to me and he was “mom did that just happen”? Every step of the way they were with me. They always informed me of any changes etc. So appreciated communication and help from Olga, Maria, Zumary, Stephanie, Jennifer and Chris. I am extremely grateful to Denisse B. & Attorney Claribel Acosta for helping me so at ease with the transitions and process of it all till the end. These girls rock!!! Great communication, Great Service, forever grateful for the blessing of the Benenati Law Office for this Season of my Life. Trust me , Attorney Walter Benenati was the right choice for me and it will be for you too.”
Robert and Joyce W.
“We were very impressed with professionalism no matter who we spoke to when we called the office. We were always treated with respect and kindness. The process was very smooth and there were no surprises. The whole procedure was explained beforehand and the process was exactly as explained. We were very embarrassed at having to file bankruptcy but Mr. Benenati and his staff always made us feel at ease and helped us to maintain our dignity through a very difficult time. We cannot thank them enough for helping us to get a fresh start!”
“I’m not sure if my words alone, could explain every detailed step that was taking by every individual in the Orlando and Kissimmee offices, that helped me with all of my documents. They went above and beyond. Customer services is an understatement. I work with over 65000 people and word of mouth is everything. If you need a lawyer and his staff that will work hard for you, Walter Benenati and his staff should be your # 1 choice.”
“Initially, I was embarrassed about having to file for bankruptcy. Your firm made me feel comfortable about my decision and did not judge me at regarding my past financial decisions. Everything happened just the way it was explained at the consultation. No hidden costs or excessive time away from work. Thank you so much for helping me get my life back on track.”
The Benenati Law Firm is the best. I can’t speak highly enough about their staff. Walter and their team were excellent helping me in my case. They answer all questions, answer the phone immediately every time, and they offer an awesome price. They are very knowledgeable with all laws. I’m amazed how fast my case was handled and done. I will continue to to use the Benenati Law Firm in the future. I would definitely recommend to my family and friends. Thank you Benenati Law Firm for helping me restart my life.
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