How Bankruptcy Can Help Small Business Owners

Bankruptcy Can Help Small Businesses

Bankruptcy may be an option for small business owners seeking debt relief.  There are several factors to take into consideration to determine if bankruptcy can help including the legal form of your business, whether or not you are liable for outstanding business debt, the type of debt and whether or not you want to continue being in business.   The legal form of your business refers to your business structure; whether it’s a sole proprietorship, general proprietorship, limited liability company or a corporation.

Small business owners can utilize benefits of either Chapter 7 or Chapter 13 bankruptcy .  In Chapter 7 Bankruptcy , you have the option to file for yourself or on behalf of your business.  You are considered the same legal entity if you file as a sole proprietor so you’ll likely file a personal petition to wipe out business and personal debt; you can choose to continue running your business after debts are discharged.  As a sole proprietor you can utilize exemptions to help you keep business-related assets.  If your business is a corporation, partnership or limited liability company, Chapter 7 easily helps in discontinuing your business with the bankruptcy trustee in charge of liquidating assets and making sure creditors receive payment.

Chapter 13 can help your business by creating a repayment plan that allows you to keep your business running.  This option can be utilized by any business type, even a sole proprietor.  This chapter can help you pay priority debts, reduce secured loan amounts to create a reduced payment and protect business assets so you can continue operating your business.  You may even qualify to have personal liabilities wiped away or eliminated under Chapter 13.  To learn more about how bankruptcy can help your small business, discuss your situation with a reputable bankruptcy.