Starting your own small business is always difficult and risky. For sure, it deserves respect to entrepreneurs who have courage and particular skills they are using to run the business. Unfortunately, some small companies just don’t have much in the way of assets. Depending on your business situation, there are two options: close and liquidate it or have the opportunity to continue running it. Various factors, such as whether you’re the sole proprietor or if your organization is loosing money, play a role in what will ultimately happen.
When Will You Be Forced To Liquidate Your Business?
In order to keep you from sustaining additional debt, the bankruptcy trustee is likely to force you close your business after you apply for bankruptcy, at least unless the value of your assets and your exempt status are assessed and defined. If the trustee decides that you have nonexempt possessions, they will insist you sell your business assets and pay off your creditors.
How Bankruptcy Works For Business Owners
If the first option of closing your business is just unacceptable for you, there is a rescue. You might have the ability to keep your business working due to bankruptcy. Below are the three bankruptcy options you have in order to keep your business:
1. Chapter 7 Bankruptcy
If you are the sole owner of your company and also have little or no possessions, Chapter 7 bankruptcy might be the means to go. Since Chapter 7 discharges both your individual as well as business financial debts, you’ll be able to use exceptions to safeguard your organisation and also its assets. You’ll erase your debt and have the ability to continue running your company.
2. Chapter 13 Bankruptcy
Just self-employed entrepreneur could file for Chapter 13 bankruptcy. If you have a significant amount of nonexempt possessions, this choice is the most optimal because you’ll have the ability to reorganize your debts through a repayment plan that is designed to allow you business stay the course.
3. Chapter 11 Bankruptcy Choice
If your business is an LLC, firm or partnership, you will have to submit a Chapter 11 bankruptcy as opposed to a Chapter 13. Similar to a Chapter 13 bankruptcy, Chapter 11 will certainly allow you to make repayments while keeping your business running. The only distinction is that you should submit operating reports once the plan is accepted by the creditors.
4. Transferring Assets
It is essential to follow your lawyer’s suggestions regarding the transfer or sale of assets. Certain transfers, made prior to submitting bankruptcy, could be considered fraudulent; these include moving, eliminating or hiding huge assets right after taking some legal actions. Such transfers might be turned around by the Bankruptcy Court, making the assets you or your business own available to the creditors.
McKoon, Williams, Atchley & Stanley, PLLC has a wide experience of working with business entities, ranging from sole proprietorships and partnerships to corporations and limited liability companies (LLCs). Our clients include existing businesses and startups, as well as founders of closely held companies, professionals, and investors in real estate. Let us assist you in making the best decisions for your business regarding filing for bankruptcy at the Chattanooga Bankruptcy Specialists. Call us today for a free consultation and start the process of getting your business back on track.