When you first started up your business, you may have acknowledged that there was a percentage of risk that it might not be successful, just like any other business owner must accept. But it is much more devastating when this hypothetical turns into the reality. You may not want to throw in the towel, especially with how much time, energy, and money you poured into this venture you were once so passionate about. However, given your business’s current financial state, you may have no choice but to declare bankruptcy. Well, if you are in this situation, please follow along to find out whether you risk losing your business when you file for bankruptcy and how a proficient Rockland County business bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C. can help you salvage it however possible.
Will I possibly lose my business if I file for bankruptcy?
There is no unanimous answer as to whether you will lose your business with a bankruptcy filing. The true answer is that it heavily depends on your chosen business bankruptcy type. Most popularly, there are Chapter 7 and Chapter 11 business bankruptcies. The former is otherwise known as a liquidation bankruptcy, much like the Chapter 7 consumer bankruptcy option. At this time, your business’s operations may be terminated while a trustee takes control and liquidates your non-exempt business assets. They may then use these liquidated funds to pay back your outstanding creditors. In short, if you cannot exempt your business interests, you are likely to lose your business in this process.
For the latter, Chapter 11 business bankruptcy is arguably attributable to Chapter 13 consumer bankruptcy. This is because you may be able to continue your business’s operations while restructuring your business’s debts. In other words, for all your non-exempt debts, you may be expected to create and follow a plan to pay them off over five years. With these continued operations, you may keep your current employees on payroll and even collect a personal income yourself.
What should I consider before choosing a bankruptcy type?
Initially, Chapter 11 business bankruptcy may be most appealing to you as it allows you to hold onto your business. But the fact of the matter is that not every business owner qualifies for this bankruptcy type. You must prove to your bankruptcy trustee and court that you have the means to follow a five-year repayment plan.
While it may seem devastating to lose your business due to bankruptcy, you may be better off if you simply give yourself a fresh start. With that being said, Chapter 7 business bankruptcy may be your best option under any or all of the following circumstances:
- Your business debts significantly outweigh your business assets.
- Your business has little to no predicted chance of turning a profit in the near future.
- Your business provides products and services that are too general or common to compete in the marketplace effectively.
And so, if you are ready to get started on your bankruptcy filing, now is a better time than ever to contact a talented Rockland County business bankruptcy attorney. The Law Offices of Allen A. Kolber, Esq., P.C. is here to help.
