Small Business Bankruptcy
If your small business is struggling with debt, bankruptcy may provide some relief. Whether bankruptcy can help depends on a number of factors, including:
- the legal form of your business (for example, is your business a sole proprietorship, general partnership, corporation, or limited liability company?)
- whether you're personally liable for business debts
- whether you want to close your business or keep it running, and
- how much and what types of debts you have.
Here you'll find information on using Chapter 7, Chapter 13, and Chapter 11 bankruptcy for business debts, how to figure out if you are personally liable for business debts, and whether there are nonbankruptcy alternatives to deal with business debt in your situation.
Chapter 11 bankruptcy and Chapter 11, Subdivision V, let filers restructure debts, modify payment terms, and decrease balances and are primarily used by struggling businesses with the ability to remain operational.
If you are a struggling small business owner, filing for Chapter 7 bankruptcy may help save your business or provide a simple way to liquidate it.
If you're a small business owner struggling with debt, you might wonder if a business bankruptcy in Chapter 13 would help you reorganize your debts and save your business. If you're a sole proprietor saddled with debt and struggling to keep your small business open, Chapter 13 bankruptcy might help you keep business assets, pay important creditors, and reduce the amount owed on debt.
Bankruptcy can help you whether you wish to continue or shut down your business. However, which type of bankruptcy can benefit you the most depends on your business structure and if you intend to stay in business.
Bankruptcy can help keep a small business open or eliminate business-related debts after closure. However, avoiding an unexpected result requires understanding the benefits and limitations of Chapter 7, Chapter 13, and Chapter 11 bankruptcy.
Whether you can be held personally liable for the debts of your business depends on the structure of your business and how it was formed.
Whether your spouse is liable for your business debts depends on how your business is organized and how the debt was incurred.
Learn when Chapter 7 or Chapter 11 bankruptcy works best for businesses and how bankruptcy rules differ depending on whether an individual or small business files for Chapter 11 vs. Chapter 7 bankruptcy.
Bankruptcy can help keep a small business open or eliminate business-related debts after closure. However, avoiding an unexpected result requires understanding the benefits and limitations of Chapter 7, Chapter 13, and Chapter 11 bankruptcy.
Learn about the differences between Chapter 11 and Chapter 13 business bankruptcies.
There is nothing in the bankruptcy law that prohibits you from starting a new business after bankruptcy. In fact, you might be able to apply some lessons learned from your prior financial problems to keep you out of trouble in the new business.
You can probably get a business loan after bankruptcy, but it will be more difficult. Learn what steps to take to increase your chances of getting a loan.
Whether a business bankruptcy will affect your personal credit depends on whether you are personally liable for the business debt under the law.
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