Starting a business takes incredible courage and a lot of hard work. Keeping a business going takes even more hard work, dedication, and also a bit of luck. Sometimes, businesses that have excellent potential are unable to bring in enough money to stay afloat. Its hard for a small business owner who has spent so much time and energy on his business to close it. However, it’s important that small business owners understand all their bankruptcy options. This knowledge helps them determine whether business bankruptcy is for them.

Which Business Bankruptcy do I File:

Most small business owners will be able to choose between three bankruptcy filing options. The first option is for business owners who wish to close up shop. Sole proprietors, general partnerships, and even some corporations can file Chapter 7. Chapter 7 bankruptcies are liquidation bankruptcies. In a chapter 7 non-exempt assets are sold in order to pay creditors, and eligible debts are discharged.
Small business owners who wish to stay in business may be able to choose between filing for bankruptcy under Chapter 11 or Chapter 13 though. Chapter 11 bankruptcy is an option for sole proprietorship’s, corporations, LLCs, partnerships, and other business entities. In a Chapter 11 bankruptcy, the business owner creates a plan for reorganizing their finances and proposes it to the bankruptcy court. Hence, Chapter 11 is the option for large businesses. Those large businesses do so in an effort to renegotiate debt.

Make A Business Bankruptcy Plan:

Depending upon what is most important for your business is what determine the plan. Your proposed plan could include things like selling off assets and equipment. Keeping equipment and assets that your business needs for its continued operation. Discharging debts, and renegotiating the terms of secured debts for items that you want to keep. Once your plan is approved, you will spend the next few years conducting your business according to its terms. If you abide by the terms of your reorganization plan for the specified time period, certain debts are discharged.

If you are a sole proprietor, you may be able to file for bankruptcy under Chapter 13. This is an individual reorganization chapter of bankruptcy. The reorganization plan that you propose to the court in a Chapter 13 bankruptcy could also include some of the same things as a Chapter 11 bankruptcy. This includes keeping necessary business equipment, selling unneeded assets and equipment, renegotiating debts, and discharging other debts. Chapter 13 bankruptcies cost less than Chapter 11 bankruptcies, and they take less time. However, Chapter 13 bankruptcies are not as flexible as Chapter 11 bankruptcies, and there are debt limits which could affect your eligibility to file under Chapter 13. Another condition is that the creditors must not receive less in a chapter 13 than in a chapter 7.

Implement The Business Bankruptcy Plan:

After you’ve educated yourself about options available to small business owners, it’s time to decide whether bankruptcy is right for you. A good way to begin this process is to spend some time thinking about your business. Think about what direction you would like to go with it and whats possible. Then, write down your personal and business goals. With those goals in mind, take a look at your current financial situation. You can do that by making a list of your business assets and their current values. Compare this to a list of your business creditors and the amount of debt that you owe to each one. Most importantly, take your time and be objective. A small business bankruptcy can be very helpful to a struggling business owner, if it is undertaken after careful thought and contemplation.

Free Bankruptcy Information

If you have questions about small business bankruptcy call today. Talk with a local bankruptcy attorney and get the facts. We offer a free initial consultation where we will answer your questions, evaluate your needs and explain your options. Please contact us at South Tulsa Bankruptcy Lawyers or fill out our online form today!