Bankruptcy isn't always a "fun" issue to discuss or consider, especially when it comes to your business. However, if financial struggles plague your business, it's crucial to address the situation as soon as possible. Failing to identify a solution could result in the eventual collapse of the organization, which is why a business bankruptcy must be considered. By allowing you to reorganize and rebuild your company, a business bankruptcy could be the solution for your struggling business model to start afresh. Meeting with a bankruptcy attorney will help you understand each option clearly and allow you to see whether or not a specific chapter is right for you.
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Bankruptcy Options for Small Business Owners
Before meeting with a bankruptcy attorney, it's important to have a basic understanding of the various business bankruptcy options available. Having general knowledge of the business bankruptcy selections will make your meeting with a bankruptcy attorney more productive. Options include:
1.Chapter 7. This business bankruptcy option is for those businesses that have no future or means to restructure their debt. This option is known as "liquidation" because the business's assets will be sold to gather capital to repair creditors. While Chapter 7 is best suited for individuals and sole proprietors, limited liability companies and corporations can file for a Chapter 7 business bankruptcy as well.
2.Chapter 11. Unlike a Chapter 7 filing, Chapter 11 is for those businesses that have a plan for the future of their business and can continue operating with a reorganization of their debts and proper money management. Chapter 11 is one of the most complex of the filing options, so it's vital to seek the counsel of a bankruptcy attorney if Chapter 11 is the option your business would like to pursue. However, only sole proprietorships, corporations, and partnerships can apply for a Chapter 11 business bankruptcy. It is likely that a court-appointed trustee will keep a discerning eye focused on the business and its operation during and after the bankruptcy filing.
3.Chapter 13. Similar to Chapter 11, a Chapter 13 business bankruptcy filing allows the organization to reorganize their debts. However, the business must meet Chapter 13's eligibility requirements, something that a bankruptcy attorney can help you determine. This option is particularly popular for business owners whose personal assets are connected to their business, as Chapter 13 provides more protection for those major assets, such as a home, for example. Keep in mind that a bankruptcy attorney will also help you protect your valued assets.
4.Chapter 12. This option is specifically designed for "family farmers" or "family fisherman." Under this business bankruptcy option, debt will be reorganized for a payment plan lasting 3 to 5 years.
Still unsure of which option is best for your business? Before meeting with a bankruptcy attorney, be sure to consider whether or not your business should be reorganized or liquidated. Answering this simple question quickly determines whether Chapter 7 is a feasible option. Also consider how much of the debt is secured and whether or not you could start over after the liquidation process. Disclosing your full situation to the bankruptcy attorney will allow him or her to provide the best guidance possible.
Is Bankruptcy Right For You? Talk to Bankruptcy Attorneys Free and Confidential. Licensed bankruptcy attorneys are available. Attorneys will call you to discuss your case for free. Find out if bankruptcy is right for your situation.
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