Small Business Bankruptcy
The idea of losing your business can be terrifying and facing the unknown as your business is struggling can be an extremely uncomfortable process. When your business finances are starting to seriously impact your own personal finances, you might start to consider the option of filing for bankruptcy. Filing for bankruptcy as a business often causes a lot of anxiety but working with an experienced attorney can make sure that you can enjoy a stress-free process as you are working through your small business bankruptcy. No small business owner wants to consider the idea of a bankruptcy for the company that they worked hard to build. However, bankruptcy can potentially help you emerge from the situation in a financially stable position.
Should You Consider Working With a Bankruptcy Attorney?
When you’re choosing whether or not to file for bankruptcy with a small business, it is important to contact an experienced bankruptcy lawyer so that you can have a well formed opinion on the nature of bankruptcy. Depending on the way you have formed your company, you may not have to file for bankruptcy at all. If your business is an LLC or corporation, you could simply close the doors and solve a number of your financial problems.
It’s difficult for courts to start going after your personal assets and finances when your company has been formed as an LLC or corporation. Personally protecting yourself from any creditors and making sure that debts that you have only need to be paid out in the form of company assets can be an important level of protection for your future. Your business can continue to run at a loss if you are working in a Corporation. As soon as you start to mingle your personal finances with your business, you can leave your assets unprotected and run the risk that you could face massive debts.
If you have noticed that your creditors are starting to target your personal accounts, you may be a wise idea for you to file for bankruptcy and to work at protecting your assets. If you continue to let creditors target items within your own personal interest you could run the risk that you may lose your house, your vehicles and other assets. There are many types of bankruptcy that you can look at and some that are particularly advantageous for a small business owner.
Which Type of Bankruptcy?
A bankruptcy lawyer will help you to choose the ideal chapter that you can file under. Bankruptcy lawyers can help you wade through the numerous options for you to choose the best chapter for your needs. Here are some of the main paths that you can take to file as a small business owner!
Chapter 11 Bankruptcy
A Chapter 11 bankruptcy is the best way that your business can continue to function even when paying off some of its debts. A creditor will approve your repayment plan and your debts can be forgiven under Chapter 11. You will be responsible for paying back your debt on a convenient repayment plan as part of the business agreement.
Chapter 7 Bankruptcy
If you operate your business as the sole proprietor you can file under Chapter 7 bankruptcy because this will cover your business debts and personal debts. In this version of bankruptcy you will be able to sell your business and liquidate all the assets in order to cover your debts. Continuing your business operations will be impossible after this and you will have to start a new company.
Chapter 13 Bankruptcy
If you are a sole proprietor you can file under Chapter 13 but if you incorporate your business or form an LLC you will be unable to file under Chapter 13. Businesses which are LLC’s and corporations will not have the option to create a repayment plan. Under Chapter 13 you are using your own personal finances on a repayment plan in order to pay back a small amount of your debt to creditors each month.
If you need assistance choosing the right type of bankruptcy, speaking to a bankruptcy lawyer could be the best way that you could get quality advice on the chapter that will suit the needs of your business. If there are a number of exemptions that can come into play with any of these chapters, a bankruptcy attorney can examine your debt and determine how the majority of your debt can be eliminated.
Contact us today if you need assistance with your small business bankruptcy!