Struggling with debt?

When to Consider Chapter 7 vs. Chapter 11 for Business Debt

CHAPTER 7 OR CHAPTER 11 – WHAT’S THE RIGHT MOVE?

Delancey Street offers a MONEY BACK GUARANTEE for debt relief services, because we believe in our ability to help you deal with your business debt problems. And guess what? Regardless of whether you decide to file for Chapter 7 or Chapter 11, we’re here to guide you – from start to finish.

AS SEEN ON top news outlets, our team of in-house specialists has one mission: Helping you fix your debt problems. If you have business debt – or are just curious about the different routes – we have your back.

What is Chapter 7 Bankruptcy for Business Debt?
Sometimes called a “straight” bankruptcy, Chapter 7 is designed to liquidate a business’s assets, in order to pay off creditors. The company typically ceases operations once the assets are distributed. That means, if you’ve got a business with way more liabilities than assets, it might be time to consider Chapter 7.

Regardless of whether your business is struggling with:

• Merchant cash advance agreements
• Credit card debt
• Invoice factoring issues
• Confessions of judgment

We can help you figure out if Chapter 7 is the right path. In many cases, once the process begins, the company will shut down. Either way, now – that debt is toxic. You might want a fresh start, and Chapter 7 is the quick route.

Relevant Laws and Government Citations

• The U.S. Bankruptcy Code, Title 11 of the United States Code, governs the ins and outs of bankruptcy. Visit the U.S. Government Publishing Office for the complete text. This is something every attorney is familiar with, and can speak to you about.
• The United States Courts website offers official resources on different bankruptcy chapters, timelines, and requirements.

Penalties and Implications under Chapter 7

• Automatic Stay: The moment you file, your creditors have to stop all collection actions – meaning no more creditor calls or lawsuits.
• Asset Liquidation: A court-appointed trustee may sell business assets. If you try to hide assets or commit fraud, you risk federal penalties under 18 U.S.C. §§ 152–157 (provisions covering bankruptcy fraud).
• Business Closure: Once a Chapter 7 wraps up, the business is typically defunct, and any intangible property belongs to the bankruptcy estate.

Defense Strategy if You’re Considering Chapter 7
Look, we get it: you might be concerned about personal liability and how you’re going to live your life after the dust settles. Delancey Street has a proven track record of protecting clients from creditors – and we do it in a practical way.

1. Evaluate Personal Guarantees: Regardless of whether you signed on the dotted line personally, we find solutions that minimize your exposure.
2. Negotiate with MCA Lenders: No lender wants you to file bankruptcy. They prefer to negotiate. We talk to them, so you don’t have to.
3. Document Everything: We preserve every piece of evidence showing your willingness to solve the problem legally and ethically.

Stream of Consciousness – Could Chapter 7 Get Dismantled?
Sure. It’s not a guarantee. A creditor – especially a litigious one – might challenge your bankruptcy filing. They might allege you committed fraud. They might question whether you’re truly insolvent. And guess what? Even the trustee might investigate your records for hidden assets or suspicious transfers. Bottom line: if someone dismantles your Chapter 7 filing, you’re left without that fresh start.

How We’d Defend You

• We’ll gather financial statements that prove your legitimate inability to repay your debts.
• We’ll push back on the lender’s claims aggressively – whether it’s an MCA lender or a judgment creditor.
• We’ll show the trustee you acted in good faith, which is crucial.

REGARDLESS OF THE SITUATION – WE CAN HELP YOU.

What is Chapter 11 Bankruptcy for Business Debt?

“Ch. 11 is TOTALLY different,” you might say. And yes, it is. Under Chapter 11, the business typically keeps operating, under a court-approved reorganization plan. So if you want to stay in business, Chapter 11 is the route that might make sense. If you have a lot of MCA debt, this can be an option to get out of immense business debt.

Regardless of whether you have:

• Merchant cash advance liabilities
• Credit card balances in the 100k range
• Multiple business lines of credit

With Chapter 11, your business can attempt to restructure, reduce monthly payments, and extend repayment terms. If you work with Delancey Street – our goal is to help you avoid filing bankruptcy by re-structuring your business debt.

Citations and Government Websites

• The United States Bankruptcy Court portal is a goldmine of official info.
• Specific sections relevant to Chapter 11 are found in 11 U.S.C. §§ 1101–1195 (subchapter specifics).

Penalties and Implications under Chapter 11

1. Filing Fees and Compliance: Chapter 11 is VERY expensive and complicated than Chapter 7. Failure to pay fees or comply with court orders can lead to case dismissal or conversion to Chapter 7. You don’t necessarily need to file for bankruptcy. You have other options.
2. Operating as a Debtor-in-Possession: You stay in control of your business, but major decisions require court approval (e.g., selling assets, getting new financing). If you misuse this privilege, you can be penalized, or the court may appoint a trustee.
3. Creditors’ Committees: Secured lenders and unsecured creditors can have a powerful say in how your business reorganizes.

Defense Strategy if You’re Considering Chapter 11
Because Chapter 11 is complex, you need a robust strategy. At Delancey Street, we handle the day-to-day negotiations with your MCA lenders or any other creditors.

• We create the plan that systematically addresses each class of creditors.
• We handle objections from creditors who say your plan is too lenient.
• We manage the timeline, ensuring your monthly operating reports and financials meet all the filing requirements.

Stream of Consciousness – Could Chapter 11 Get Dismantled?
Absolutely. If your creditors don’t like your plan, they can push for a conversion to Chapter 7. Or they might argue your plan is not “feasible” under 11 U.S.C. § 1129. If the court agrees, your Chapter 11 can collapse – and you’re back to square one.

How We’d Defend You

• We’ll introduce a feasible plan that shows you can actually repay at least a portion of your debts.
• We’ll talk to creditors outside the courtroom, persuading them that it’s in their best interest to let you continue operating.
• We’ll monitor deadlines so no procedural default can be used against you.

REGARDLESS OF WHAT STAGE YOU’RE AT – WE CAN HELP YOU.

Penalties for Misrepresentation or Fraud in Bankruptcy
Under 18 U.S.C. § 157, bankruptcy fraud is a federal crime, which can carry up to five years in prison and hefty fines. Whether you’re in Chapter 7 or Chapter 11, you must disclose all assets, income, and liabilities.

WHY DELANCEY STREET?

• MONEY BACK GUARANTEE: If we can’t help reduce or consolidate your business debt, we’ll refund you. That’s the DELANCEY STREET difference.
• WE HAVE EXPERIENCE: We’ve dealt with 100’s of clients who struggle with Merchant Cash Advances, factoring, or other business debt.
• WE PROTECT YOU: No lender wants you to file bankruptcy. So we use that to your advantage, negotiating terms that benefit you – whether you file or not.

WE SAVE YOU THE TIME of dealing with creditor calls. We stand in for you.