Can a Small Business Declare Bankruptcy?
Like individuals who are in financial distress, small businesses can file bankruptcy to alleviate the burden. If you are a small business owner and think that bankruptcy is your only option, be sure to speak with the bankruptcy attorneys at Oswalt Law Group in Phoenix. We have the experience and knowledge to help you determine if bankruptcy is the best option for you. If it is not, we can offer you alternatives.
What Type of Bankruptcy Would I File If I Want to Stay in Business?
There are two common restructuring options for business owners who want to file bankruptcy but who also want to try to stay in business:
- Chapter 11 – If your business is owned by a partnership, limited liability company or corporation, this option allows you to continue to operate while developing a plan to pay off your debt.
- Chapter 13 – This type of bankruptcy allows you to keep your assets while reorganizing and paying off at least a portion of your debts through a court-approved repayment plan.
Both of the above options allow debtors to continue to conduct business as well as propose individualized plans for restructuring finances. If the owner wants to close the business and file for bankruptcy, he or she should consider Chapter 7. Whether you choose either Chapter 7, Chapter 11 or 13, you can discharge or eliminate certain debt obligations over the plan term.
Which Option is Best For Me?
Most small business owners choose Chapter 13 over Chapter 11 because Chapter 11 can be time-consuming and expensive. However, it does provide more flexibility. To determine which option is best for you, discuss the specifics of your situation with a bankruptcy attorney like those at the Oswalt Law Group in Phoenix. There are certain eligibility requirements for Chapter 13. For example, it is only available to those who have regular income. If you operate your business as a sole proprietorship, you can usually file for Chapter 13. However, if your small business is operated through corporations, partnerships, or other entities, you are not eligible to seek Chapter 13 relief and must choose Chapter 11. Almost anyone can qualify for Chapter 11. To determine the best option for your business, talk to a bankruptcy attorney at the Oswalt Law Group. We understand complex bankruptcy law and can help you navigate it. Give us a call today to get started on the path to a debt-free financial future.