Individuals in the United States regularly obtain financial relief by filing for personal bankruptcy. Business owners are also able to use bankruptcy filing for relief from debts, and the American Bankruptcy Institute (ABI) reports1 that 40,075 businesses filed for bankruptcy in 2012. While large corporations like General Motors have high profile bankruptcy proceedings, numerous small business owners and entrepreneurs also benefit from bankruptcy solutions to recover from a struggling business. If you are a Long Island business owner who is experiencing financial difficulties, call the Law Office of Ronald D. Weiss at 631-271-3737 to discuss your options today.
Business owners have several options when it comes to achieving debt relief through bankruptcy and your decision should be based on several factors, including how much debt your business faces, what type of business you run, whether you plan to close the doors to your business, and more. The following are types of bankruptcy that regularly help business owners.
Chapter 7— Chapter 7 bankruptcy is available to all types of business entities, including LLCs, corporations, partnerships, and more. Additionally, if you have a sole proprietorship, you may file for personal bankruptcy under Chapter 7 and include debts stemming from your business. This type of bankruptcy is generally best for business owners who do not wish to continue operations, as it usually involves the liquidation of any business assets.
Chapter 11— Chapter 11 bankruptcy is also available to different types of business entities and is generally best for small business owners aiming to keep the doors of their business open. Chapter 11 allows owners to reorganize debts so that payments are manageable and does not require them to liquidate. This kind of filing can be expensive and complicated, however, for businesses with a higher amount of debt.
Chapter 13— Bankruptcy under Chapter 13 of the United States Code is not available for business entities, however if you run a sole proprietorship, you may file for personal bankruptcy under Chapter 13 and include your business-related debts, as well. The kind of bankruptcy is often used by those with significant assets that they wish to keep or who have too much income to qualify under Chapter 7.
As you can see, you have different options for small business bankruptcy, and an experienced lawyer can assist you in making the right decision.