When a small business is overwhelmed by debt, filing for bankruptcy may be the best solution for financial recovery, and the next steps to take will depend on:
- The type of entity that the business is based on – specifically, whether the business is a sole proprietorship, general partnership, corporation or limited liability company (If the small business based on a sole proprietorship or a general partnership, the business owner will be personally responsible for paying for any debts that the business cannot cover; this may mean that the individual, along with the business, will have to file for bankruptcy.)
- The business owner’s goals – namely, whether the owner intends to continue operating the business after the bankruptcy case
- The amount and types of debts the business owes.
These factors will help play a role in determining whether it’s a better idea for the small business owner to file for Chapter 7, Chapter 11 or Chapter 13 bankruptcy.
- Chapter 7 bankruptcy for businesses: While Chapter 7 bankruptcy is often used by individuals, it can also be used for businesses when the business owners want to close the business and liquidate its assets to pay off existing debts. In order for a business to be eligible for Chapter 7 bankruptcy, it must be a partnership, corporation or limited liability corporation. Unlike with personal Chapter 7 bankruptcies, there are no available exemptions, and debts will not be discharged by these proceedings.
For more regarding bankruptcy for small businesses, check out our upcoming Part 2 of this blog.
Colorado Bankruptcy Lawyers
If you are overwhelmed by seemingly insurmountable debt and are looking for a financial fresh start, contact the trusted Colorado debt relief and bankruptcy lawyers at the Law Office of Jon B. Clarke, P.C. For more than 35 years, Mr. Clarke and his diligent support staff have been successfully helping our clients resolve even the most complex bankruptcy cases for both individuals and businesses alike. Our experienced legal professionals are committed to providing each of our Clients with the personalized debt relief assistance they need, and we will work tirelessly to ensure that our Clients’ cases are resolved as favorably and efficiently as possible.
For a thorough assessment of your situation, along with expert advice regarding the best manner in which to move forward to unburden yourself from debt, call us at (866) 916-3950 or email us some details about your situation by clicking here.