Even though most all bankruptcy cases are filed by individuals or families, a business can also seek the protections offered by the bankruptcy laws. When a business is struggling to pay its vendors or to make payroll, it may be time for a reorganization. Business bankruptcy can be beneficial to a small business because it offers some breathing room and a chance to get back on track.
The Small Business Administration has a good rundown of the types of bankruptcy available to a small business:
- Chapter 7: while usually reserved for individuals, if your business is a sole proprietorship, or so tied up with your personal finances, this chapter may work best for you. This is especially true if your plans are to close the business rather than continue in operation.
- Chapter 11: if, on the other hand, you want to keep your doors open, a Chapter 11 is a better fit. This type of bankruptcy allows you to stay in business, and repay your creditors over time.
- Chapter 13: also typically reserved for individuals, Chapter 13 can be filed by a small business and allows for a reorganization of debt.
There are also options available to farmers, and fishermen. The type of bankruptcy you file depends on your plans, and your needs. Whatever choice you make, rest assured once you file the calls and collection efforts will come to a stop. This benefit may be the biggest of all, because it gives you the opportunity to focus on your business and its growth rather than on fielding collection attempts. You might also consider a workout or other loan modification for your largest debts, which could give you the time and flexibility to pay smaller debts and free up capital. For more information about filing bankruptcy for a small business, call our office today.
If you have questions about how bankruptcy can benefit your small business, call our office for answers. Call a Plantation, Florida debt relief attorney today for more information.