Businesses sometimes struggle with money due to a variety of issues, such as the economy stumbling or having a hiccup with third-party vendors. Whatever the reason is, if a business gets too far behind on payments or isn't bringing in enough profits, it may need to turn to bankruptcy.
If you wish to keep your business open, a Chapter 11 bankruptcy can be a good option. It allows for the restructuring of your business so that you can make strides toward profits in the future with a new business plan and a better business structure.
Some people choose to put an end to the business completely with the help of a Chapter 7 bankruptcy. Liquidation bankruptcies are sometimes helpful in paying back creditors since businesses can sell off their remaining stock items and use the funds to pay back what they owe.
How can a business owner choose the right option?
It may be a good choice to look into both before deciding which one to file for. Your attorney can help you go through your documents and determine if one type of bankruptcy may be more effective than another. Usually, there is a restriction on the number of times you can enter into bankruptcy and how long you have to wait between them, so you'll want to make sure you choose the right form the first time you file.
Our site has more on bankruptcy and what you should do if your business is struggling due to debt. With help, it's possible to resolve this situation and get out of debt.