It’s not uncommon for a small business to struggle. Unfortunately, it happens pretty often. 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.
Whenever someone hears the word “bankruptcy” they’re often thinking of Chapter 7 bankruptcy – most common type. But there are other options: chapter 7, 11, and 13 – each type of bankruptcy has its pros and cons and could apply to your specific situation in different ways.
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 of having to sell off assets and dealing with creditors. The downside with chapter 7 is that your personal liabilities for business debts remain.
Chapter 11 bankruptcy is the most complicated of the three as it relies on much more action on your part as well as the approval of your creditors. Not unlike chapter 13, chapter 11 allows your to organize your debts with a repayment plan and allows you to keep operating your business.
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.
Deciding on the bankruptcy that’s right for you may seem like a complicated choice. In some cases, it can be! But you want to make sure that you’re doing what’s right realistically for your business and yourself. Don’t go through this process alone!
I can help determine which bankruptcy option is best for you. My office is open weekdays from 8 a.m. to 5 p.m. and offers free parking. Contact me today at 856-488-1200 or toll free at 866-488-2196 for a free initial consultation with a Cherry Hill personal bankruptcy attorney. You can also contact me by filling out our contact form.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.