Bankruptcy isn't always the first thing you want to try if you're falling behind on bills, but it is an option when you can't see a way to get control of your debt. As a business owner, you want to see your business succeed, but there are outside influences that could hold you back.
If your small business ends up being in over its head in debt, you have three types of bankruptcy that you can choose from that could help. Keep in mind that you, personally, might be responsible for the debts of your business unless you structured it as a corporation or LLC.
Why choose Chapter 7 bankruptcy for a business?
Chapter 7 bankruptcy is liquidation bankruptcy, so you will have to sell all the business' assets. If you did not create your own business entity and are responsible for the debts you took on for your business, then you may also have assets that must be sold to deal with the bankruptcy and debts you've accrued.
The good thing about Chapter 7 bankruptcy is that it allows most debts to be discharged without repayments. The only repayments you'll make come from the assets sold by the bankruptcy trustee. The best thing about that is that there are exemptions that could help you protect many of the things you own, so you don't have to worry about being completely wiped out by bankruptcy.
Choosing the right bankruptcy option can be hard, so it's usually best to discuss your options with someone who is familiar with these three forms and others.