If you’re like many other small business owners struggling to overcome business debt and keep your doors open, you may be considering bankruptcy a viable debt relief option.
If your business is an established partnership or corporation, you may not be allowed to file for chapter 13 bankruptcy protection. Although you may be able to file for chapter 7 bankruptcy, that option may not be the best for you if you wish to save your business assets and keep your doors open.
On the other hand, Chapter 11 bankruptcy will allow you to reorganize your business debts and enjoy other benefits offered to small business owners. Under Chapter 11, debtors are able to restructure their debt and setup a bankruptcy payment plan while their business continues to operate.
File Chapter 11 Bankruptcy and Continue to Run Your Business
One advantage of chapter 11 bankruptcy over chapter 7 is that chapter 11 allows you to continue running your business after your bankruptcy petition has been filed. There may be some decisions that you would need to seek the permission of the bankruptcy courts for, but most day-to-day business decisions you can make yourself.
Chapter 11 bankruptcy can be more expensive and time-consuming than other alternatives. It should therefore not be taken lightly, and you should make sure chapter 11 is the right type of bankruptcy for you before filing your petition.
Difference Between Chapter 11 and Chapter 13 Bankruptcy
If you are a sole proprietor with relatively small debt that can be covered under chapter 13 bankruptcy, then you may still want to consider declaring chapter 11 bankruptcy. Debtors in chapter 11 are given more time to propose a payment plan, and are not subjected to the same restrictions as a chapter 13 payment plan.
Declaring bankruptcy on a small business that’s in financial trouble is not an easy decision to make. If your small business is a partnership or small corporation, chapter 11 bankruptcy may be a possible option for you. A sole proprietor with a large amount of debt that is not covered under chapter 13 could benefit from the flexibility chapter 11 offers.
If you are considering bankruptcy as a debt relief option, contact us to schedule a FREE consultation with an experienced bankruptcy attorney to discuss all options available to you before making any business or life-altering decisions.