For many small to mid-sized business owners in the Sunshine State, bankruptcy is synonymous with defeat. However, those with more experience know that owning your own business does not guarantee financial stability. There may be a time when you need to make significant investments and come up with sizeable capital for growth and expansion. The higher the risk, the higher the potential for massive returns.
The problem is when the return on investments drastically fails to meet your expectations. To the savvy business owner, filing for bankruptcy can be a calculated move to protect and potentially salvage their company from overwhelming debt. It is not the end of the road for your company but a strategic detour that leads back to financial health.
Using bankruptcy as a strategy
For Florida business owners, two types of bankruptcy generally come into play: Chapter 7 and Chapter 11. Chapter 7 is basically a liquidation process that involves selling assets to pay creditors. Chapter 11 allows companies to keep operating while restructuring their debts and develop a feasible plan to pay their creditors over time. Before you decide which option best suits your unique situation, here are steps you can take that can help you strategize effectively:
- Assess your situation by reviewing your finances thoroughly to determine if bankruptcy is the optimal course of action.
- Based on your informed and thorough assessment, decide whether Chapter 7 or Chapter 11 is more suited to your business needs and objectives.
- Consult an attorney with experience in bankruptcy to guide you through the complex legal process and help you avoid unnecessary mistakes.
- Prepare financial statements, asset inventories and debt lists, and gather any other relevant documentation.
- File for bankruptcy by submitting your petition to court.
- Communicate with your creditors and inform them of your intentions.
Filing for bankruptcy is an invaluable strategy that can help business owners eliminate many types of business debt and give them a clean slate. An automatic stay goes into effect, so creditors must cease all collection efforts, including harassing calls, lawsuits, and any attempt to repossess property. This gives you the breathing room to focus on your bankruptcy strategy without the distraction and stress of relentless creditor demands.
If done correctly, filing for bankruptcy can offer you a way out of debt and a chance to rebuild your business on a more stable foundation.