Cash flow problems, out-of-control interest and any number of other financial challenges can spell trouble for even the best small enterprises. Luckily, if you are having this type of trouble, there are almost limitless ways in which you could potentially recover.
You might negotiate with creditors, take cost-control measures or apply for bankruptcy. In fact, even within bankruptcy, there could be various options available to you as an entrepreneur. Some may surprise you.
Your business formation
The nature of your organization would probably be a major factor in any decisions you make about debt. Some common types of ownership our clients have are sole proprietorship, partnership in LLC or interest in corporations.
For example, you might associate Chapter 11 with business bankruptcy — and for good reason. This chapter of the bankruptcy code contains special regulations to deal with large amounts of money and complicated organizations.
What many do not realize is that the bankruptcy law does not distinguish between a sole proprietor and the business that person owns. In short, if you were the sole proprietor of a small company, you could have the option to pursue a relatively simple type of personal procedure.
Your professional goals
After you looked at the type of company you have, you would probably want to think about your goals for the future. This could help you decide which path to take.
Assuming you were the sole proprietor of a small business, and that you would like to keep the business running, Chapter 13 could be a good option. If you thought it might be better to walk away from the operations and repay your creditors in the process, Chapter 7 might be preferable.
In the end, it would be hard to say which strategy our business bankruptcy clients usually prefer. It depends so much on the situation, the level of preparation and the future outlook of the company in question.