Is your small business struggling to pay back its debt obligations? Have creditors filed lawsuits against you for defaulting on business debts? If you answered yes to these questions, then you should consider filing for bankruptcy. When consumers or businesses file for bankruptcy, an automatic stay is issued that temporarily halts most collection attempts. Depending on the circumstances, your business has bankruptcy options that may include:
- Chapter 11 bankruptcy: During a Chapter 11 bankruptcy, your debts are reorganized and paid through a repayment plan that can for up to ten years. After your business files Chapter 11 bankruptcy, you still retain control of over most business decisions. Chapter 11 is a good choice if your finances are complex and if you want to stay in business.
- Chapter 7 bankruptcy: If you want to close shop and pay off your creditors, then Chapter 7 bankruptcy might be the right choice for your business. With a Chapter 7 bankruptcy, your business assets would be liquidated to pay back your creditors. Whether you would receive a discharge on all debts related to a Chapter 7 business bankruptcy depends on the circumstances.
- Chapter 13 bankruptcy: Many business owners cannot file for Chapter 13 bankruptcy. That is because only sole proprietors and certain partnerships are eligible for this option. During a Chapter 13 bankruptcy, you pay back your creditors in a three to five-year repayment plan. Debts may be discharged when the payment plan ends and you may keep secured properties.
Which Business Bankruptcy Option Is Right for Me?
Which option is right for your small business is entirely dependent on your individual circumstances. If creditors are coming after your assets due to nonpayment of debts, then you should speak to a bankruptcy attorney about the options discussed in our blog. By contacting an attorney with experience helping small businesses file for bankruptcy, you could determine which option would best suit your needs.
The Manalapan business bankruptcy attorneys at Garland & Mason, L.L.C. can help struggling business owners discover options for debt relief.