As a small business owner, you hope that you never run into financial difficulties. If this does happen, you need to know your many options for getting back on track.
There may be a time when Chapter 7 or Chapter 13 bankruptcy is your only option. This is not something you want to do, but it could be the best way to solve your financial issues and regain your footing.
Chapter 7 bankruptcy is often the right idea for small business and sole proprietorships. With this, a trustee is appointed to sell assets of the business. From there, all proceeds are used to pay debts.
Chapter 13 bankruptcy is another idea to consider. As a business owner, you are required to agree to a repayment plan that allows you to pay back some or all of your debts over a period of three to five years.
In the event that you did not form a business entity and you are the only owner of the business, you can look into the process of filing for Chapter 13 bankruptcy.
As you learn more about Chapter 7 and 13 bankruptcies, you can decide which one is best for your business at the present time. You may also find that neither option works for you, but you can instead follow another strategy to put your financial issues in the past.
When you understand how Chapter 7 and 13 bankruptcy work, it’s easier to make an informed and confident decision. You need to know what you are getting into, as the well-being of your business is at risk.
Source: Fox Business, “A Bankruptcy Guide for Business Owners,” Donna Fuscaldo, accessed June 08, 2016