Many small business owners who want to file for bankruptcy wonder if it will help them continue their business. While doing so can play a significant role in business continuation, it depends on the formation of their companies, whether they plan to continue operating the business, and the assets and debt they have.
Businesses and individuals can file for chapter 7 bankruptcy. Still, a small business owner can rely on chapter 7 to declare bankruptcy without a lawyer. Personal and business debt for sole proprietors is resolved under chapter 7 bankruptcy.
While filing for Chapter 7 bankruptcy doesn’t clear the debtor in bankruptcy case, some business owners file for individual bankruptcy after their business close down. This enables them to wipe out their liability to pay a business debt or a personal guarantee.
While individuals can file for chapter 13 bankruptcy, business organizations like LLCs, corporations, or partnerships cannot. However, sole proprietors can have an attorney check bankruptcy filings and help them organize their business and personal debts. The attorney can also help them understand the drawbacks of filing bankruptcy and recommend other alternatives to help them keep their companies afloat.
Filing bankruptcy is scary and very stressful. There are enormous amounts of videos and tips out there on how to file for bankruptcy. Before you decide to make the move to file you will want to be sure that this is the right decision to make. Rest assured below are some tips on how and when it is time for you to start filing bankruptcy for a small business.