When you are an entrepreneur, there are many different aspects to think about including what kind of merchandise or services you might sell and provide, who you want to do business with, and whether you have the funds to keep your business open. Unfortunately, many people who own small businesses find that their businesses fail and they are not sure what they should do next. A skilled lawyer would be able to help protect you by showing you the best kinds of bankruptcy options to file for. While bankruptcy may seem like it’s giving up, it is actually an incredibly useful tool that can ensure you can begin reorganizing your debts.
What are the different bankruptcy options when it comes to my business?
This article will detail some of the bankruptcy options you may want to consider when it comes to your small business.
Option #1, Chapter 7 Bankruptcy: When you know that your business has nowhere to go and no future, it is likely that Chapter 7 bankruptcy, also known as business bankruptcy, is the best option. If you were to continue with the business and try to restructure your debts, this might not be the best option for you. However, when you know you do not wish to continue with your business or you know that your business does not have a large number of assets, reorganizing it will not do you any good. It is important to note that when you use this type of bankruptcy you are essentially stating you will be dissolving your business.
Option #2, Chapter 11 Bankruptcy: Chapter 11, also known as business reorganization, is when you believe that you have a realistic way to turn your business around. Your only option would not be to dissolve the business, thus you can reorganize and continue your business. When you choose this option, you will create a detailed plan outlining the reorganization and how you intend to deal with your creditors. The creditors involved can vote on this plan and a court will either approve or deny it.
Option #3, Chapter 13 Bankruptcy: Chapter 13 bankruptcy is known as personal bankruptcy and can be used for sole proprietorships. Similar to the above, you would detail a repayment plan on how you intend to repay your debts. When it comes to what you need to repay, the amount will depend on how much you owe creditors, how much you earn annually, and what type and how much property you own.
When you need to speak with someone about bankruptcy for your business, you should seek help from an attorney to see how he or she can help you. Owning a small business can be difficult and bankruptcy may be the only option, but a lawyer can help figure out what your best chance for success is.