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Category: Bankruptcy Law
Satisfied Customers: 17252
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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I have a client that is contemplating bankruptcy. They run

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I have a client that is contemplating bankruptcy. They run a food retail business and are very behind in bills, mortgage payments. What steps can they take to stop creditors and layers from harassing them. what are the pros and cons of chapters 11 and 7


Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati on.


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:

  • use threats of violence or harm;

  • publish a list of names of people who refuse to pay their debts (but they can give this information to the credit reporting companies);

  • use obscene or profane language; or

  • repeatedly use the phone to annoy someone.

False statements. Debt collectors may not lie when they are trying to collect a debt. For example, they may not:

  • falsely claim that they are attorneys or government representatives;

  • falsely claim that you have committed a crime;

  • falsely represent that they operate or work for a credit reporting company;

  • misrepresent the amount you owe;

  • indicate that papers they send you are legal forms if they aren’t; or

  • indicate that papers they send to you aren’t legal forms if they are.

Debt collectors also are prohibited from saying that:

  • you will be arrested if you don’t pay your debt;

  • they’ll seize, garnish, attach, or sell your property or wages unless they are permitted by law to take the action and intend to do so; or

  • legal action will be taken against you, if doing so would be illegal or if they don’t intend to take the action.

Debt collectors may not:

  • give false credit information about you to anyone, including a credit reporting company;

  • send you anything that looks like an official document from a court or government agency if it isn’t; or

  • use a false company name.

Unfair practices. Debt collectors may not engage in unfair practices when they try to collect a debt. For example, they may not:

  • try to collect any interest, fee, or other charge on top of the amount you owe unless the contract that created your debt – or your state law – allows the charge;

  • deposit a post-dated check early;

  • take or threaten to take your property unless it can be done legally; or

  • contact you by postcard.


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.


thank you

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