It may be that your small business has fallen into financial difficulty and you don’t see any way of rectifying this. It may be that you now need to consider small business bankruptcy. Whether this is going to be a solution or not for your particular business entity is going to depend on the circumstances.
The type of business you have is going to be important for example, whether it is a corporation or limited liability, or perhaps a sole proprietorship or general partnership. It has to be noted whether you are individually liable for the business debts. You also have to consider whether you want to shut down the business or keep it running. Also the type of debts and the amounts are going to be an important factor.
There are several different chapters of bankruptcy that could be important to you these are the Chapter 7, 13 and Chapter 11 bankruptcy for business
Some of the benefits of potentially applying for small business bankruptcy are that it may be able to help you reorganize your debts so that you will be able to continue on with your business. It may be able to wipe out the liability that you have personally for your business debts. Or another option is it will help you to liquidate the business.
Whose debt is it?
One of the important factors is who is responsible for the business debts. If it turns out that you are a sole proprietorship or general partners then you are personally responsible for the debt obligations of your business. Then it comes down to that if the business income is not able to pay the debts, then the creditors that you owe to as a result of your business can go against your personal assets to rectify this situation.
If your company is a limited partnership or you are a corporation then you are not going to be held personally responsible. It will be the business which is a separate entity that has to satisfy the creditors. This means the creditors are only able to go after the business assets. This is of course if you have not co-signed personally or put a personal guarantee for any of the debt that has been accumulated by the business.
If your business is in financial difficulty and you are considering bankruptcy make sure you seek out a qualified bankruptcy attorney.