Small businesses are started every day. As such, there will invariably be some that don’t gain traction as quickly as was predicted. Any number of factors can contribute to a small business losing too much money and having to file for bankruptcy. If you are an owner of a small business and are going through this exact situation, you will be relieved to know that there are a myriad of bankruptcy options available for you to choose from. The following will provide an in-depth and detailed look at what bankruptcy options are open to small businesses.
Chapter 7 bankruptcy is the type of bankruptcy that is filed by small business owners that basically see no future of the business surviving and have little to no assets at the moment. Through this type of bankruptcy, all remaining assets will be sold off in order to fill a portion of the remaining debts, while the rest of the debts will be discharged, which means that the debtor will no longer owe them.
While Chapter 7 bankruptcy was designed for small businesses and their owners that saw no future of the survival of the business, Chapter 11 bankruptcy is often filed by business owners that believe that business can eventually be turned around. Small business owners that decide to file this type of bankruptcy typically have a recovery plan for the future of their company. Chapter 11 bankruptcy allows a business to continue through an in-depth reorganization. It’s important to note that this is one of the more complicated bankruptcy types for small business owners and will require a lot of fortitude and perseverance, as there will be a trustee assigned by the court in order to keep an eye on the reorganization process as a means of ensuring that the business can be salvaged.
Chapter 12 bankruptcy is typically reserved for family farmers or fishermen. If your small business falls under this category, then it’s possible to file for this bankruptcy instead of the standard Chapter 7 or 11 bankruptcies. Chapter 12 bankruptcy allows debtors to propose a type of repayment plan that is focused around making installments to all of the creditors in question. With this type of bankruptcy, the debtor can use this repayment plan for a period of 3 to 5 years in total.
As for Chapter 13 bankruptcy, this type of bankruptcy allows the debtor to create an in-depth repayment plan on how the debts are going to be paid. The debtor will then provide this to the bankruptcy court to review and decide if the bankruptcy should go forward. This is generally a reorganization type of bankruptcy that is usually meant to be filed by consumers. However, small business owners can make use of it. This type of bankruptcy is particularly advantageous for one type of situation. If the personal assets you have are tied into any business assets, filing Chapter 13 bankruptcy as opposed to Chapter 7 bankruptcy allows you to basically avoid the possibility of losing your home.
How to Identify Which Bankruptcy is Best for Your Small Business
The type of bankruptcy you choose to file all depends on your needs as a business owner. If you believe that you can still salvage the business and turn it around into a profitable one, then Chapter 11 bankruptcy is something that you should seriously consider. However, if you don’t have a concrete and direct plan for reorganizing your business, then you may have to file Chapter 7 bankruptcy. Chapter 12 and 13 bankruptcies are also possible depending on what type of small business you own and what your assets are. While you may have an idea of which bankruptcy you want to file, it’s recommended that you retain the services of our NYC bankruptcy law firm to ensure that the process is as efficient and smooth as possible.
How We Can Help
When you choose to retain our services, there are a wide range of ways in which we can help you with filing for small business bankruptcy. We will aid you in deciding whether your business should be liquidated or reorganized and will identify how much of the debt for your business has been secured. If Chapter 11 bankruptcy is appealing to you as a small business owner, we will ascertain whether or not you have the resources and determination that is needed in order to undergo a complete reorganization. There is also a possibility that yours is a business that can be started up almost immediately after liquidation, which is something we will determine for you. If you have further questions about small business bankruptcy, feel free to contact us at any time.
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