The Five Reasons To Consider Filing For Bankruptcy If You Are A Small Business
Your business is going nowhere. You have met with a team of lawyers. Some argue for filing bankruptcy, and some are arguing against it. One thing is for sure, your business is suffering. Which way do you turn?
You decide to file for Chapter 7, in spite of some of the pushback you get from some of your lawyers. There could be some advantages to filing for Chapter 7. If you need help locating or getting started with a bankruptcy attorney, view the bankruptcy lawyer directory
Your business could go into an automatic “stay” as opposed to going into collections. A debt collector could go after your business or other personal assets if you choose not to file.
Now, keep in mind, this option should only be exercised when you have no other options available. Make sure that your team of lawyers has exhausted every other option before you pick this one.
There are some exceptions, to the rule, but you could get a fresh start without old dues. That means the debt has been discharged. The debt collector could be free to move onto someone else. Now, you do need to check with your lawyer first. He or she might have a different interpretation of what will happen.
Under the current statute of law, you could retain at least part of your properties. The reason is that Chapter 7 prevents creditors from going after your assets.
This statute is mostly reserved for Massachusetts, but other states might have a law regarding this option too. You should also consult with your lawyer to verify that your situation holds up in court. Those who do not have this protection could have any assets taken from them and used as collateral for the debt.
This portion of the law many see as a slippery slope. That is why it is better to consult with your lawyer first.
Do you have additional debts through Chapter 13 and 11? You could be eligible for a debt paydown. That means that you could have your other debt added to Chapter 7. You might end up paying less by using this option. Now, again, every situation is different. You may or may not be eligible, but it is worth looking into.
Do you have additional property? Most small business owners do not get categorized under this tab, but you never know. Some small business owners are fortunate to have more than one property.
What you do is use the other properties to pay down the debt. You can still keep your primary property. Now, for some people, that can be an advantage. It depends on the circumstances to which you file.
Sometimes Chapter 7 treats people differently. You might be able to have some debts discharged while paying down the ones that cannot. You might not get that lucky with Chapter 13 or 11.
You might have the option of keeping your operation open during the process. You will just have to restructure your business a little bit. You might not get that with Chapter 13 or 11.