Chapter 7 bankruptcy is one option when you need to declare bankruptcy for your business. You may hear people refer to it as liquidation because that is what happens when you file this chapter.
Before you file, it is essential that you understand what filing Chapter 7 means and how it will impact your business.
The US Courts explain Chapter 7 requires selling off your business assets to repay your creditors. You have little control over what stays and what goes. Typically, you will completely liquidate all the assets of your business, which will mean you have to close the doors. You will walk away without remaining debts, giving you a clean slate to begin again or move on to something different.
Usually, the choice to file Chapter 7 is the last resort for a business. Since it means the end of the company, deciding to file means you feel there is no possibility that you will be able to revive your business through the alternative bankruptcy option under Chapter 11, which reorganized your assets and debts to create a plan for repayment.
Filing for Chapter 7 will allow you to get out from under a failing business that has little to no ability to revive itself. If you have dropping sales and rising debt with no signs of anything getting better, Chapter 7 can help save you from drowning in your bills and the stress of trying to keep your business afloat. Once you walk away from the bankruptcy, you can move forward to a future where you can begin again.