Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarification.
A bankruptcy filing would indeed stop the creditors, however the decision to choose between a chapter 7 or 11 is complex.
If they do not want to keep the business than a chapter 7 would discharge all of their unsecured debts, but any non exempt assets can be take by the Court to pay off their creditors.
A Chapter 11 would be fine for the business, if they want to keep it.
A Chapter 11 would be fine if they want to save their business as it would reorganize their debts and create a plan to pay the creditors off at some percentage.
If the debt is personal debt the chapter 7 would be better as their personal debt would be discharged, typically a chapter 11 is for corporations to reorganize their corporate debt.
If the business is a corporation cna the creditors attach any personal assets
If their is no personal guarantee the creditors can only go after the Corporate assets.
If all the debt is corporate, then they can let it go and not even file bankruptcy, if they want to keep the business open than a chapter 11 should be considered.
What do you do then when the creditors are calling
if you dont have a method of getting them off your back
You can contact them and advise them you are filing bankruptcy and that you will file a complaint with the Federal Trade commission for unlawful debt collection as well.
will that affect your personal credit score
Harassment. Debt collectors may not harass, oppress, or abuse you or any third parties they contact. For example, they may not:
False statements. Debt collectors may not lie when they are trying to collect a debt. For example, they may not:
Debt collectors also are prohibited from saying that:
Debt collectors may not:
Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:
A person credit score can only be affected if the debt not paid is personally guaranteed, if it is corporate debt than their credit score will not be hurt.
A bankruptcy if filed personally would hurt their own credit score, but a chapter 11 does not if it is a corporate filing.
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