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What A Business Owner Expects When Filing For Bankruptcy
If your once flourishing business is being crushed under the weight of burgeoning overhead and shrinking profits, it is time to consider filing for bankruptcy. Thousands of small business owners have discovered that bankruptcy offers a permanent and comparatively painless solution to otherwise intractable financial difficulties. To join their ranks, contact an experienced bankruptcy attorney today. The impact declaring bankruptcy will have on your business depends on what type of bankruptcy petition you file. An attorney can help you assess your options, choosing between:
- Chapter 7 - Liquidation and discharge
- Chapter 11 - Business reorganization
- Chapter 13 - Debt consolidation
How To Liquidate Your Business
If you own a sole proprietorship, you should consider filing under Chapter 7 or Chapter 13. If you file under Chapter 7, the court will order you to sell most of your assets and distribute the proceeds to your creditors. Any remaining debts will be discharged, and the court will order your creditors to cease their collection efforts. In most cases, you will trade your business for freedom from your debts.
Using Bankruptcy To Consolidate Your Debts
If your business still earns a significant income, a Chapter 13 bankruptcy may be preferable. Under Chapter 13, the judge will work with you and your creditors to establish a repayment plan. If the court concludes that the plan is acceptable, the judge will order you to make periodic payments for 3-5 years.
Discharging Debts Owed By Corporations And Partnerships
If you are the majority owner in a struggling partnership or corporation, you should consider filing for Chapter 11 bankruptcy. Under Chapter 11, you and your attorney will provide the court with a plan to repay all or part of your debt. If you will not be able to fully satisfy your debts, a Chapter 11 bankruptcy can give you time to liquidate your business efficiently rather than dumping your assets for a fraction of their true value. Once your business no longer has any real value, you can file for Chapter 7 bankruptcy, liquidate whatever assets remain and discharge the remaining debts. Alternatively, if you completely repay your creditors, your business will survive.