As a business owner, it is clear to you that your debt is not manageable at its current level. You have been thinking of ways to eliminate it. One that you keep coming back to is declaring bankruptcy.
However, your business is still getting customers and making sales. You do not want to give up on the concept just yet. If you declare bankruptcy to eliminate your unsustainable debt, does that mean your business has to close, or is it possible for you to stay open?
Chapter 11 bankruptcy
It depends on the type of bankruptcy that you use. If you use Chapter 7, for instance, your business will likely close. This is because Chapter 7 requires you to liquidate non-exempt assets. Without these assets—such as machines, equipment, real estate, vehicles, inventory, etc.—your business likely will not be able to function as intended.
But you can also declare Chapter 11 bankruptcy, which is known as reorganization bankruptcy. This gives you a chance to reorganize your debt and consolidate it. You can set up an affordable monthly repayment plan. By doing this, your business can continue to stay open, making money that is slowly paid into this plan. Over time, you eliminate the debt, and there need not be any major interruptions in the business’s functionality.
What is best for you?
What you decide to do depends on a wide range of factors, such as the business’s income and your plans for the future. Just be sure you know exactly what legal options you have at this time. An experienced attorney can help.