How filing for bankruptcy will affect your business depends on which bankruptcy chapter you file under and what type of business you have. Our law firm handles Chapter 11, Chapter 7, and Chapter 13 bankruptcy cases, so we can review your case in a free consultation and provide you better insight into your legal options then. Here are some possible outcomes:
- If you have a corporation or limited liability company (LLC) and file under Chapter 11, you may be able to reorganize your debts and negotiate your loans with creditors, thus saving your business.
- If you own a small business and file under Chapter 7 personal bankruptcy, this may help you to shut down your business, liquidate business assets, and pay business debts in an organized manner and with bankruptcy court oversight.
- If you are a sole proprietor and file under Chapter 13 bankruptcy, you may be able to reorganize your debts since you and your business are considered one “person.”
Chapter 11 Bankruptcy Could Help Preserve Your Business
If you own a corporation, LLC, sole proprietorship, or partnership, you may choose to file for Chapter 11 bankruptcy. According to the U.S. Courts, some of the benefits behind this method include:
- It allows you to reorganize your business and business debts separate from your personal assets and debts.
- It can give you time to negotiate your loans with creditors.
- Because your personal assets are separated from your business, they are not at risk of liquidation.
- The court can approve a repayment plan to allow your business to catch up or restructure its debt.
Individuals who own small businesses may not want to file under Chapter 11 bankruptcy (though they can). This process can be complicated and involve high fees that might not be affordable for business owners who are financially struggling.
Our team can review your financial situation and records to determine if Chapter 11 bankruptcy is the right option for your business, but there may be other routes you can take. Remember, bankruptcy is not a safety blanket, but it can be a method of preserving your business during economic distress.
Questions You Must Ask Yourself Before Filing Chapter 11 Bankruptcy
You may already be asking yourself whether it is worth filing for bankruptcy if your business is in financial peril. Many entrepreneurs often struggle with knowing when to throw in the towel or continue the good fight. With that, ask yourself some hard questions:
- Is your business losing money because of the current times or outside forces?
- Do you think your business will ever begin to earn profits or are people not buying your product(s)?
- Are your business assets valuable and making money, thus worth saving?
- Did you take out personal loans to cover your business debts, thus making you personally liable?
Our representatives will also be interested in this information as we help you build your case. We aim to help you save your business and finances as best as possible.
Chapter 7 and Chapter 13 for a Sole Proprietorship or Small Business
If you own a small business or are a sole proprietorship (e.g., a freelancer), you may be interested in filing for Chapter 13 or Chapter 7 bankruptcy. Individuals generally file under these chapters, but they can be methods to help entrepreneurs manage their business debts.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy can be a better option if you are aiming to keep your business running and would like to renegotiate your loans. Through this process, you will:
- Receive a court-approved repayment plan for the next three to five years
- Agree to keep making regular payments during and after the bankruptcy process
- Receive an automatic stay on collection of your debts, meaning that bankruptcy law stops creditors from trying to pursue you and your assets to pay off your debts
- Be able to negotiate with creditors about how much of your debts you can pay back
- Discharge a portion of your debts
There are certain requirements you must meet, which our bankruptcy lawyers can explain to you in future consultations.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy involves complete discharge or forgiveness of debts, but may also involve liquidation of assets. It may not be a good option if you are trying to save and continue running your business. However, if you are trying to relieve yourself of your personal and business-related debts, Chapter 7 bankruptcy may be in your interest.
A Bankruptcy Lawyer from Our Firm Can Handle Your Case for You
If you would like some assistance with your bankruptcy case, you can work with a lawyer from our team. We offer to:
- Prepare and submit bankruptcy papers required by the U.S. Courts
- Represent you in mandatory meetings and court hearings
- Advise you throughout your case to help you with your business
You can learn more about our services in a free consultation.
Our Team at Farmer & Morris Law, PLLC, Wants to Help You and Your Business
If you are considering filing for bankruptcy and are wondering how it will affect your business, call Farmer & Morris Law, PLLC, at (828) 286-3866 for a free consultation with our team.
Our law firm handles bankruptcy cases for both individuals and business owners. You can work with a bankruptcy lawyer from our team and refer to us whenever you have questions about your case.