Competition for consumer dollars is fierce in today's market. Small business owners typically don't have a budget that is as large as a national chain store's. This can make it difficult to become successful in some niches.
Bankruptcy is an option for small business owners looking to get their businesses out of debt. Learn more about the bankruptcy process so that you can more effectively determine when bankruptcy would be a viable option for your small business.
1. Bankruptcy Doesn't Have to End Your Business
A lot of small business owners mistakenly believe that they will have to close the doors of their business after filing for bankruptcy. This isn't always the case.
Businesses can choose to file a Chapter 7, Chapter 11, or Chapter 13 bankruptcy. Only a Chapter 7 bankruptcy dissolves a corporation or LLC.
If you want to continue operating your business after using bankruptcy as a tool to manage debt, your attorney can help you choose between a Chapter 11 and Chapter 13 petition.
2. There May Be an Alternative to Bankruptcy
If the thought of filing for bankruptcy is overwhelming, you may be able to take advantage of an alternative option established by the federal government.
The Small Business Restructuring Act (SBRA) was passed by Congress in 2020. Under this act, your attorney can help you prepare and submit a restructuring plan for your business. The restructuring plan is then submitted to the court for expedited review and approval.
Once your plan has been accepted, the court can force creditors to comply with the new terms outlined in the restructuring plan. Using the SBRA is often a faster option than filing for Chapter 11 bankruptcy.
An experienced attorney will be able to review your company's financial information to determine if your small business is eligible for bankruptcy relief under the SBRA.
3. The Help of an Attorney Is Essential
Bankruptcy forms are available for all business owners to prepare themselves. Just because you can file a bankruptcy without the help of an attorney doesn't mean that you should.
An experienced attorney will be able to help you navigate the filing process.
Your attorney can advise you on your bankruptcy options, as well as go over any protections and exemptions that may apply to your small business. This type of legal oversight will prevent you from losing more than necessary when your small business is filing for bankruptcy.
Contact a bankruptcy law attorney for more information.