Bankruptcy isn't easy to go through no matter what situation you're in, but it can be made easier if you're prepared to take the steps you need to take before you file. Doing your best to try to renegotiate contracts and free up capital could help you avoid bankruptcy with your business, but if you can't, then your attorney may suggest a type of bankruptcy to help you.
There are several kinds of bankruptcy for different situations, but one of the most commonly used for businesses is Chapter 11. Chapter 11 bankruptcy is also known as restructuring bankruptcy. It allows your business to remain open while you negotiate new contracts and create a plan to help your business move forward in the green.
With a Chapter 11 bankruptcy, you need to propose a plan for reorganization. This plan will discuss how you plan to move forward with your business and pay back creditors over time. New arrangements can be made to make this affordable for you while allowing you to continue running your business in the meantime.
A Chapter 11 bankruptcy is relatively inexpensive compared to the potential loss of a business. It costs $1,167 and has an administrative fee of $550 as of January 2019. If this is too much to pay at once, the court does allow it to be paid in installments if you seek permission.
Your attorney can discuss Chapter 11 bankruptcy with you and if it's the right choice for your business. It's one option that could help you continue to run your business despite challenges.