It’s not uncommon for a small business to struggle. Unfortunately, it happens pretty often and with the toll the global pandemic has had on many small businesses, bankruptcy might be the last option. A bankruptcy for your business may be in order if you find that it has accrued a significant amount of debt. Under the right circumstances, declaring bankruptcy may save your business, eliminate your personal liability in terms of business debts, and more.
There are several types of bankruptcy, such as Chapter 7, Chapter 11, and Chapter 13 – each type of bankruptcy has its pros and cons, but more importantly they could apply to your specific situation in different ways.
Chapter 7 Bankruptcy For Small Businesses
Chapter 7 bankruptcy can be filed for your business if it is a partnership, LLC, or corporation. This option is most often used if the business is going to be closed altogether. It absolves a business owner(s) of having to sell off assets and dealing with creditors. The downside with a Chapter 7 bankruptcy is that your personal liabilities for business debts remain.
Chapter 11 Bankruptcy For Small Businesses
Chapter 11 bankruptcy is the most complicated of the three choices as it relies on much more action on your part, as well as the approval of your creditors. Like Chapter 13, Chapter 11 also allows you to organize your debts with a repayment plan and allows you to keep operating your business. Your business does not have to close with this option.
Chapter 13 Bankruptcy For Small Businesses
Chapter 13 bankruptcy can only be filed as an individual, not as a separate business entity. Unless of course you are sole owner and proprietor – in this case, you and your business are considered one and the same. Chapter 13 is most attractive to business owners with plenty of assets who intend on keeping their business as it allows you arrange a repayment plan for existing debts. Personal liability for business debts can also be tossed into this bankruptcy.
Talk To A Bankruptcy Expert & Experienced Bankruptcy Lawyer
Deciding on the bankruptcy that’s right for you may seem like a complicated choice. In some cases, it can be. You want to be sure that you pick the best option that is right for you and your business. Don’t go through this process alone, there are bankruptcy lawyers that are experts in helping you decide what is best for your specific situation. Joel R. Spivack is an experienced bankruptcy lawyer that can help you with your specific case. We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. Contact the Law Office of Joel R. Spivack today at 856-488-1200 for a free initial consultation with a personal bankruptcy attorney or by filling out our contact form.
The articles on this blog are for informative purposes only and are no substitute for legal advice or an attorney-client relationship. If you are seeking legal advice, please contact our law firm directly.