In today’s ever-changing climate of uncertainty, small businesses are among the most vulnerable to insurmountable debt. If you are a small business owner and find yourself overwhelmed by creditors breathing down your neck or are struggling to make payroll on time, you may find yourself wondering how to get relief and keep your business running. There are a few different bankruptcy options available to you to help lift the weight of heavy debt.
If you are looking for a way to keep your doors open and keep your business running, as usual, Chapter 11 bankruptcy may be your best option. Unlike Chapter 7 and 13, Chapter 11 does not require you to liquidate your debts, but instead calls for a restructure of the conditions of paying back your loans in such a way that will allow you to continue to run your day to day operation as usual while paying back your lenders.
Chapter 11 Bankruptcy
With Chapter 11 bankruptcy, you will have a specific timeframe in which to pay back your creditors, so it is important to have an attorney who is well versed with the fine details of the process to help you maneuver the complex legalities. After approval, you will have a very specific repayment plan that you will need to adhere to, but it should be both attainable for you while fair to your lenders.
Chapter 7 Bankruptcy
If you find that your debts are just too much to pay back and feel that it is not feasible to keep your business going, Chapter 7 may be the option that best suits your needs. If you can liquidate whatever assets you have left that are non-exempt, your debts may be able to be discharged so that you can resolve your issues quickly and move on to your next venture. Of course, if your income is too high, you may not qualify for Chapter 7 in which case Chapter 13 may be a better way for you to proceed.
Chapter 13 Bankruptcy
If you find that keeping your business going is not an option yet you’re not eligible for Chapter 7 bankruptcy and your priority is strictly to get out from under your debt, Chapter 13 would allow you to file as an individual as opposed to a business. It would discharge some if not all of your debt without liquidating any assets. Typically, Chapter 13 requires a 3-5 year time frame for repayment depending on your creditors’ agreed-upon terms.
Deciding to file for bankruptcy is not an easy one, nor is the process; it can be overwhelming, making it hard to know which is the best route for you and your business to take. Having an experienced bankruptcy attorney can make the transaction run more smoothly as they know the ins and outs of how the process works. Be sure you are clear about your goals and expectations so that you and your attorney can choose the right path to suit your needs.