You may think that filing bankruptcy for your small business is admitting defeat. However, just because you file for bankruptcy doesn’t mean you have to close the doors on your business. On the contrary, sometimes bankruptcy can be used as a tool to rebuild even stronger.
When to File for Bankruptcy
If your small business is struggling to keep up with making monthly payments on various debts and bills, then it may be time to file for bankruptcy. Through the process of bankruptcy, you may have debts discharged or reorganized, giving your business a fresh start.
What Type of Bankruptcy Is Right?
Look at the different options for bankruptcy and decide which is best for your business.
· Chapter 7: If you are in over your head in your business and do not see it continuing, Chapter 7 is the best option. Some reasons to end your business could be your product not making sense with new technology, a change in personal availability to run a business, or economic uncertainty.
· Chapter 11: You can submit a proposal of reorganization for your debts to be paid. With Chapter 11, you will still have to repay your debts. But you’ll agree on a timeline that is more realistic for your business.
· Chapter 13: This type of bankruptcy is more for proprietorships. Similar to Chapter 11, your business will offer a new repayment plan during the process of bankruptcy.
For a business that is ready for a fresh start, stay away from Chapter 7 bankruptcy. You can still keep your business open with Chapter 11 and 13 bankruptcy options.
If you have questions for Miles & Hatcher, LLP, about your small business, we can help! You can speak with our trusted team to decide if it is time to file for bankruptcy with your company and if it is worth it to continue operations. Also, if you are unsure if your business qualifies for Chapter 11 or Chapter 13 bankruptcy, we can assess and help you identify which one to choose. Schedule a consultation today: (909) 481-4080.