Bankruptcy for A Small Business: What to Know
When you decided to open your own business, you knew that it had the potential for huge rewards and huge risks. You put immense effort and endless hours into running your company. Unfortunately, your debt has become insurmountable and you are looking into bankruptcy.
Filing bankruptcy is nothing shameful. Thousands of business owners in Florida do so every year. Before you do, you should read up on the bankruptcy options available to you.
What Are My Bankruptcy Options?
Bankruptcy is a process in which an individual or business entity can discharge unsecured debt by liquidating their assets, establishing a payment plan or rearranging their debt. If your business is a sole proprietorship, then you have two options:
Chapter 7: Under Chapter 7, you can liquidate certain assets to repay your creditors. Then, the court will discharge your remaining debt.
Chapter 13: Chapter 13 allows you to create a repayment plan. After the repayment period is over, the court will discharge your remaining debt.
If your company is a partnership or a corporation, then you may file:
Chapter 11: This chapter of bankruptcy allows a company to restructure and then continue operation. Typically, only large companies file Chapter 11.
It can be overwhelming to figure out which form of bankruptcy you qualify for and the steps for filing. May business owners seek outside guidance to ensure that they complete the process correctly.
Is Bankruptcy Right for My Business?
Bankruptcy can offer you a chance at a fresh financial future. If you decide to file, then you will go through pre-bankruptcy counseling to examine all your available non-bankruptcy options. Ultimately, no one can determine whether filing bankruptcy is the best move except for you.