Business Debt Relief Lawyers in Dallas: Options for Struggling Companies
Running a business is hard work. As a business owner in Dallas, you’ve probably had some sleepless nights worrying about making payroll, paying the rent or mortgage, and keeping up with other operating expenses. When money gets tight, it can feel like you’re treading water just to keep your business afloat.If your Dallas business is facing serious financial problems, you may be wondering if there are any solutions that can help you avoid having to shut down. The good news is that you have options, including working with experienced Dallas business debt relief lawyers. Keep reading to learn more about the debt relief solutions a business law attorney can provide and how they may be able to help save your company.
Common Causes of Business Debt
Before we dive into the types of legal help available, let’s look at some of the common reasons that businesses incur more debt than they can handle:
-- Economic downturns or recessions that cause decreased customer spending
- Loss of a major client or customer
- Cost overruns on a project that exceed budget
- Expansion plans that don’t pan out as expected
- Unexpected loss of a key employee or owner
- Lawsuits from customers, vendors, or other parties
- Natural disasters that force a temporary shutdown
- Poor financial management and improper use of credit
Many of these situations are outside of a business owner‘s control. When you combine decreased revenue with ongoing expenses, it doesn’t take long for a company to find itself in financial distress.
How Business Debt Relief Lawyers Can Help
If your Dallas business is facing more debt than it can handle, meeting with a business debt relief attorney should be your first step. An experienced lawyer can evaluate your situation and provide advice on which debt relief solutions may be available to you.Here are some of the ways a business debt relief lawyer can help:
Negotiating with Creditors
Your attorney can act as an intermediary to negotiate debt settlements or alternate repayment plans with your creditors. Creditors are often more willing to negotiate when they understand you have a lawyer who is looking out for your interests. This can help you buy more time or settle debts for less than you owe.
Restructuring or Consolidating Debt
Other options your lawyer may discuss include restructuring existing debt to make it more manageable or consolidating multiple debts into one loan with better terms. This can reduce your monthly payments and lower interest rates.
-Filing for Bankruptcy
For companies in the direst of straits, filing for bankruptcy may be the only option. Chapter 7 bankruptcy liquidates the business while Chapter 11 involves reorganizing debts under court supervision. An attorney can advise you on which type of bankruptcy filing is best for your situation.
Limiting Personal Liability
Your attorney can also provide counsel on limiting personal liability for business debts. This may involve setting up or restructuring your business as a corporation, LLC, or other entity that better protects your personal assets.
Stopping Creditor Harassment
If creditors are aggressively pursuing payment through harassing phone calls or lawsuits, your lawyer can send cease and desist notices informing them they must deal directly with your attorney going forward. This can provide immediate relief from creditor harassment.As you can see, an experienced Dallas business debt relief lawyer has multiple strategies to explore for helping your company regain its financial footing. The key is acting quickly before your situation deteriorates further.
Choosing the Right Dallas Business Debt Relief Lawyer
Not all attorneys have the same level of experience with business debt relief and bankruptcy laws. When researching lawyers, look for these important qualifications:
- Extensive knowledge of business bankruptcy laws and debt relief options. Look for an attorney well-versed in Chapters 7 and 11.
- Years of experience assisting troubled companies. An experienced lawyer has seen many scenarios and can better assess your options.
- Good standing with the State Bar of Texas. Check for any disciplinary issues.
- Cost-effective services. The lawyer should offer free consultations and payment plans to ease the financial burden.
- Strong negotiating skills to deal with creditors and get favorable settlements.
- Responsive communication. You need an attorney who is readily available to answer questions and keep you informed.
Don’t wait to consult with a business debt relief lawyer when faced with unmanageable debt. The sooner you speak with a lawyer, the more tools you’ll have to save your Dallas business.
-What to Expect During Your First Meeting
When you first meet with a prospective business debt relief attorney, come prepared with as much relevant information as possible. This allows the lawyer to conduct an initial assessment and provide guidance tailored to your situation. Information to bring includes:
- Details on your business structure – Is it a sole proprietorship, partnership, corporation, LLC, etc? This impacts available options.
- Personal and business tax returns for the past 3 years
- Personal and business bank statements for the past 6 months
- A list of all business assets and their estimated market value
- An accounting of all business income sources
- A list of all business debts and liabilities, including amounts owed
- Details on any pending or threatened lawsuits against your business
- Documentation for any assets or collateral used to secure loans
- Copies of all major business contracts and leases
Providing these items upfront saves time and allows the attorney to gain a clear picture of your financial status. Be ready to explain the circumstances that led to your business debt crisis and your goals, such as keeping the business open, protecting personal assets, or ceasing business operations.The lawyer will outline all of your options and provide guidance on the pros and cons of each approach. For example, they may discuss the differences between Chapter 7 and Chapter 11 bankruptcy filings and explain what happens in each scenario. Expect the attorney to ask many questions to understand all relevant details.It’s understandable to feel embarrassed about business debts and mistakes made. However, it’s critical to be 100% transparent with your lawyer no matter how unpleasant it may be. This allows them to provide the most informed counsel possible.
4 Key Questions a Business Debt Relief Lawyer Will Ask
These are some of the essential questions a business debt relief lawyer will ask during your initial consultation:
-1. What is your business structure?
As mentioned, your business structure has implications for the debt relief options available. With a sole proprietorship or partnership, your personal assets are more at risk. With an LLC or corporation, there may be ways to protect personal assets while restructuring business debts.
2. What events or factors caused your business debts?
Understanding the root causes of your debt crisis allows the lawyer to look for solutions that address those specific issues. This also provides context for creditors.
3. What efforts have you made to resolve debts so far?
Your attorney needs to know if you’ve attempted negotiating with creditors, restructuring loans, cutting expenses, or taking other measures before resorting to legal options. This demonstrates good faith efforts to pay what you owe.
4. What are your goals moving forward?
Do you want to keep operating the business or shut down? This helps the lawyer know whether to focus on debt reorganization or liquidation options. Be honest about your end goal.Being candid in response to these questions allows your attorney to develop the most effective debt relief strategy. The lawyer’s role is to ask the tough questions, so don’t hold back any details.
Options for Resolving Different Types of Business Debt
The debt relief solutions available depend partly on the types of debt your Dallas business currently holds. Here is an overview of options for addressing some common business debts:
Loans and Lines of Credit
For outstanding principal owed to banks and other lenders, your attorney can negotiate with the lender’s loss mitigation department for:
- An alternate payment plan with smaller monthly payments
- Forgiveness of late fees and penalties
- A maturity date extension to pay off the balance
- Debt consolidation with other loans
If the lender won’t negotiate, bankruptcy filing may be necessary for debt discharge.
Business Credit Cards
Credit card debt can be addressed through:
- Balance transfer to a lower interest credit card
- Debt management plan with reduced interest rates
- Debt consolidation loan to pay off cards
- Negotiating lump sum settlements for less than you owe
- Chapter 7 bankruptcy to discharge credit card debt
Accounts Payable
For amounts owed to vendors, suppliers, contractors, etc. consider:
- Payment plans spreading out amounts due over 12-24 months
- Negotiating partial settlements for pennies on the dollar
- Chapter 7 bankruptcy to discharge accounts payable
Judgments
If a creditor has already obtained a judgment against your business:
- An appeal may be possible on legal or procedural grounds
- Settlement negotiations can satisfy judgments for less than the award
- Chapter 7 bankruptcy stops collections and discharges judgment
Tax Debt
If behind on payroll, income, or other business taxes:
- Apply for an Offer in Compromise to settle for less than you owe
- Request an Installment Agreement to make smaller monthly payments
- File bankruptcy to discharge portions of tax debt
As you can see, a qualified Dallas business debt relief attorney has many strategies to resolve different types of business debts – it’s about finding the right approach for each creditor.
How a Business Bankruptcy Filing Works
If your business is no longer financially viable or negotiations with creditors fail, filing for bankruptcy may be your last resort. Here is an overview of the Chapter 7 and Chapter 11 bankruptcy processes most applicable for businesses:
Chapter 7 Business Bankruptcy
Chapter 7 bankruptcy, also called liquidation, involves closing down your Dallas business and using the proceeds from selling its assets to pay creditors. Any debts remaining after assets are liquidated are discharged. The steps include:
- You stop business operations and a court appointed Chapter 7 trustee takes control of assets
- Assets are sold, with proceeds paid out to creditors per bankruptcy rules
- Remaining business debts are discharged except for exceptions like taxes and fraud
- For sole proprietors and partnerships, personal assets may also be sold to pay business debts
Chapter 7 allows you to make a clean break from unpayable business debts, but at the cost of closing your company.
Chapter 11 Business Bankruptcy
Chapter 11 follows a debt reorganization model that aims to keep the business operating. The basic process involves:
- Filing a reorganization plan stating how each debt will be repaid
- Gaining approval from creditors and the bankruptcy court for the plan
- Repaying debts over 3-5 years based on the approved plan
- Discharging remaining debt once repayments are complete
Chapter 11 is complex and requires strong legal guidance to develop a workable reorganization plan.As you can see, business bankruptcy filings have long-term consequences that require the advice of an attorney well-versed in bankruptcy law. Be wary of any lawyer who pushes you too quickly into Chapter 7 or Chapter 11 before exploring other options.
What to Expect After Filing for Business Bankruptcy
The bankruptcy process does not end once you file the initial petition. Here is what Dallas business owners can expect after filing Chapter 7 or Chapter 11 bankruptcy:
Asset Liquidation in Chapter 7
If you file Chapter 7, be prepared to surrender control of any company assets to the appointed trustee. This may include inventory, equipment, intellectual property, real estate, and financial accounts. Liquidating assets takes time, often 3-12 months.
Court Oversight in Chapter 11
In a Chapter 11 bankruptcy, you will be required to provide regular financial reports to the court showing your compliance with the approved reorganization plan. Expect close court supervision.
Creditor Negotiations
In both Chapter 7 and 11 bankruptcies, you will likely have to continue negotiations with creditors over asset valuations, repayment plans, and settlement amounts. This is where legal guidance is vital.
Legal Fees
Expect legal fees and court costs after filing bankruptcy. Budget accordingly and speak to your lawyer about payment options. Bankruptcy can be expensive.
Impact on Personal Credit
For sole proprietors, a business bankruptcy filing can negatively impact your personal credit score for up to 10 years. This makes financing difficult.
Public Records
Business bankruptcy filings become part of the public record. Expect details of your company’s financial troubles to be publicly accessible.Be prepared for bankruptcy to be a lengthy, complex process with long-term consequences. Having an attorney well-versed in all aspects provides critical support.