Kansas City Business Debt Relief Lawyers: Navigating Bankruptcy & Alternatives
Running a business is hard work. As a small business owner in Kansas City, I know firsthand the blood, sweat, and tears it takes to get a company up and running. But despite your best efforts, sometimes things don’t go as planned. Maybe sales took a nosedive during the pandemic. Or your top employee quit, leaving you scrambling. Whatever the reason, now your business is struggling under a mountain of debt.You’re not alone. Plenty of great companies have found themselves in dire financial straits. The good news is, you have options. A Kansas City business debt relief lawyer can help you navigate the complex legal landscape and find the best path forward for your company.In this article, we’ll walk through the pros and cons of bankruptcy versus debt relief alternatives for struggling Kansas City businesses. We’ll also discuss what to look for in a qualified local attorney.
Weighing Bankruptcy: Is It Right for Your Company?
For many businesses drowning in debt, declaring bankruptcy can provide a fresh start. Under the bankruptcy code, your business debts are discharged – meaning creditors can no longer try to collect on them. This stops harassment from creditors and debt collection agencies. It also halts wage garnishments, lawsuits, foreclosures, and utility shutoffs.Chapter 7 bankruptcy liquidates the company’s assets to pay off creditors. The remaining debts are discharged. Chapter 11 allows you to restructure debts and reorganize the business to get back on sound financial footing. In both cases, the automatic stay immediately stops collection efforts when you file.While bankruptcy provides immediate relief, it also comes with downsides:
-- Your business’ credit score will take a major hit. This can make it tough to get financing, loans, etc. in the future.
- You may have to sell valuable company assets and inventory to pay off debts.
- The court appoints a trustee who oversees the bankruptcy. This leads to loss of control over certain business decisions.
- There are legal fees, court costs, trustee fees, and more associated with the bankruptcy process.
For these reasons, bankruptcy may be a last resort after exhausting other options. Talk to a lawyer to decide if it‘s the right move for your Kansas City company.
Alternatives to Business Bankruptcy
Luckily, bankruptcy is not the only recourse for struggling companies. A good Kansas City business debt relief attorney will discuss alternatives that may better suit your situation, such as:
Debt Consolidation
With debt consolidation, you take out a new loan to pay off multiple existing debts. This simplifies things by giving you just one payment at a lower interest rate. Debt consolidation only works if you can qualify for the new loan and afford the monthly payments. But it’s less damaging to your credit than bankruptcy.
Debt Settlement
In debt settlement, the attorney negotiates directly with creditors to reduce what you owe. Creditors agree to settle for less than the full amount if you can pay in a lump sum or installments. This requires having cash on hand to fund the settlements. It won’t entirely eliminate debts like bankruptcy. But it’s less expensive and damaging to credit.
-Debt Management Plans (DMPs)
A nonprofit credit counseling agency can set up a structured DMP to repay unsecured debts over 3-5 years. The agency negotiates lower interest rates and monthly payments. As long as you stick to the plan, creditors will not pursue legal action or report late payments. DMPs help avoid bankruptcy without settling for pennies on the dollar.
Business Workouts
An experienced Kansas City business bankruptcy lawyer may be able to negotiate an informal “workout” agreement directly with creditors outside of court. This allows you to restructure debt by extending repayment terms, reducing interest rates, and more. Workouts allow you to avoid bankruptcy without liquidating assets.
Choosing the Right Kansas City Business Debt Relief Attorney
Navigating business debt relief options is complex. The stakes are high, and the laws involved are complicated. You need an experienced Kansas City business bankruptcy lawyer in your corner.Here are key credentials to look for:
- Licensed in Missouri and Kansas – Make sure any lawyer you consider is licensed and able to represent you in courts on both sides of the state line.
- Business law expertise – Look for an attorney whose practice focuses specifically on assisting businesses with debt relief.
- Bankruptcy experience – Opt for someone well-versed in Chapters 7 and 11 of the bankruptcy code.
- Negotiation skills – For alternatives like debt settlement or workouts, strong negotiation talent is a must.
- Local knowledge – A lawyer familiar with Kansas City’s business landscape, creditor environment, and bankruptcy judges will serve you best.
- Affordable rates – This is especially important for cash-strapped businesses! Avoid attorneys with exorbitant fees.
- Good reviews – Check sites like Google, Facebook, and Avvo to see what past clients say.
Once you‘ve vetted options, schedule initial consultations with top contenders. This lets you meet and get a feel for who you’ll be working closely with. Come prepared with a list of questions.A competent, caring Kansas City business debt relief lawyer will thoroughly explain your options, likelihood of success, and potential outcomes. They will give expert recommendations while respecting your knowledge of your company‘s unique situation.
Know Your Rights & Defenses Against Creditors
While weighing debt relief options, it’s important to know your legal rights and defenses when dealing with creditors:
-- The Fair Debt Collection Practices Act prohibits abusive and deceptive collection tactics. Collectors cannot harass you with frequent calls, make threats, or share your debt info with others.
- Statute of limitations – In Missouri and Kansas, creditors have 5 years to sue for unpaid debt. After that, they cannot take you to court. The clock starts when you first miss a payment.
- Creditors must validate debts if you dispute or request proof in writing. They must provide documentation like the original contract or billing statements.
- If collectors sue, not responding is not an option. You must appear in court or they will win a default judgment. An attorney can help respond properly.
- The collector has the burden of proof to show the debt is yours and the amount is correct. Make them prove it.
- You may be able to claim exemptions on certain assets like home equity, retirement accounts, etc. Creditors cannot seize exempt assets.
- If the original creditor sold the debt, collectors may lack documentation to prove it’s valid. This can invalidate the debt.
Don’t let unlawful collection activities go unaddressed. Talk to a Kansas City debt relief attorney right away if you believe the FDCPA or other laws have been violated. They can send cease and desist letters or sue collectors for illegal practices.