When you open a business, your goal is to make sure it is successful. You put hours of your own time into the business. You spend your own money on marketing and setting up your shop. Unfortunately, not all businesses will succeed.
If you have set up your business but are not bringing in a profit, debts can pile up. If you want out, then you need to look into ways to take care of those debts before closing your doors.
Business bankruptcy could be an option for you
There are several kinds of bankruptcy available to business owners. One, Chapter 11 bankruptcy, allows you to restructure your business if you would like to keep it open. Chapter 7 bankruptcy is a liquidation bankruptcy that generally requires you to close. Chapter 13 bankruptcy works more like a consolidation loan, but it’s normally only used by individuals and small businesses. For a larger business like yours, you may need to consider Chapter 11 or 7 only.
Chapter 7 will ask you to shut down
Chapter 7 bankruptcy requires you to liquidate assets to repay debts. This is a good option for bankruptcy if you feel that your business has no future and that you want to close your doors for good. Corporations, partnerships and sole proprietorships are all able to use this kind of bankruptcy.
If you have few assets and little or no income, this could be a good solution for your business.
Chapter 11 allows you to restructure your business
If you would prefer to keep your business open, you could do so with a Chapter 11 bankruptcy. Chapter 11 bankruptcy gives you the option to restructure and renegotiate your debts so that you can keep your business running to continue bringing in an income. With Chapter 11, you’ll need to file a plan for dealing with creditors and debts. You will only need to repay a portion of your debts, so if this would help you keep your business open, it could be a good choice.
It’s a good idea to think about what you want before you choose bankruptcy. Will you stay open? Do you want to close down? Your options for moving forward will vary based on your goals.