Beginning a company is a huge undertaking, from the initial planning stages to the moment you make your first dollar or hire your first employee. Many startup business owners, especially those of smaller businesses, must take out a personal loan to finance the project. With or without a personal loan, it’s not unusual to entangle your personal finances in the business you care so much about. So when that business begins to go downhill or unexpectedly hits a roadblock, it can amount to extreme stress on both a professional and personal level.
Considering Business Bankruptcy
No matter what has led you to the point of financial hardship in your business, there’s no shame in considering business bankruptcy. In fact, many cases of business bankruptcy are filed as a result of the economy or other causes beyond a business owner’s control.
Business bankruptcy doesn’t always mean you must close your doors. In many cases, businesses can continue to operate through bankruptcy.
By researching business bankruptcy, you are investigating a logical option for your business to reduce financial strain. It’s a responsible and respectable method to move forward. Business bankruptcy can give you personal freedom and a fresh start for your next business venture.
3 Types of Business Bankruptcy
Just because you’re filing bankruptcy doesn’t mean that you don’t have options! In fact, there are three types of business bankruptcy to consider.
Chapter 11 - This is only used for large-scale and publicly traded business operations. Creditors and banks are more apt to cut their losses because they don’t want to invest the time it’ll take for reorganization.
Chapter 7 - LLCs, corporations, partnerships. and sole proprietors are all able to file for Chapter 7 bankruptcy. If you are an LLC or corporation shutting its doors, you must file Chapter 7 and your assets will be used to pay creditors. Partnerships and sole proprietors may also choose this type of bankruptcy. However, some exemptions may be used to try to protect personal and business property.
Chapter 13 - With Chapter 13 bankruptcy, you can elect to keep your business running and use the bankruptcy process to set up a payment plan with creditors through the court. You can also wipe out personal liability completely and protect 100% of your assets.
Finding Your Business Bankruptcy Partner
Though you might be tempted to file alone, business bankruptcy can be tricky to navigate. It’s highly recommended to partner with an experienced attorney who can guide you through the process with speed and ease.
Ron Lundquist has accumulated almost 20 years of experience in the Minnesota bankruptcy court. He can answer your questions and set you on the path to a fresh start. Set up a free consultation by calling 651-454-0007 today!