Small Business Owner Debt Relief Options
What Is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy – Chapter 11 bankruptcy caters to business owner who are looking to restructure their finances while still maintaining control of the business. Debtors are required to submit a reorganization plan to the court demonstrating their ability to use future income to pay back creditors. Under Chapter 11, business owners may also can sell some or all of its assets so it can downsize its business if need be.
Chapter 7 bankruptcy – For debtors that do not have the means to restructure the finances and wish to shut down their operations, a Chapter 7 business bankruptcy is a good option. In a Chapter 7 bankruptcy, a trustee is assigned, assets are sold, and creditors are paid from the proceeds of the sale. Partnerships, limited liability companies, and corporations may not file a Chapter 7.
Chapter 13 bankruptcy – Chapter 13 can be a small business owner debt relief option for companies structured as a sole proprietorship. This is because only individuals may file Chapter 13. Partnerships, limited liability companies, or corporations cannot file a Chapter 13. Debt restrictions apply apply; from April 2016, any individual owing more than $394,725 in unsecured debt or $1,184,200 in secured debt is not permitted to file a Chapter 13.
Chapter 11 bankruptcy – Another small business owner debt relief option Chapter 11 bankruptcy. Generally, small businesses avoid filing a Chapter 11 because it is costly, risky, time-consuming, and complicated. However, a Chapter 11 allows small business owners to restructure and continue in operation.
Other Small Business Owner Debt Relief Options
In many cases, business owners attempt to avoid bankruptcy all together and opt for one of the following:
If you are not sure what option is best for your business, speak to one of our experienced business debt relief lawyers today.