You started your own business a few years ago. Maybe you’re the only employee; maybe you’ve hired a small team. No matter what the structure looks like, your business has run into financial troubles that are largely out of your control. Maybe you have more competition than you once did, maybe the market has dropped in your area, or perhaps people just don’t have as much disposable income to spend right now.
You still think the company could be profitable, but you need to change your debt and liability picture to do so. You’ve considered bankruptcy, but you do want to stay in business. Can you do both?
You certainly can. Don’t think of bankruptcy as a step that you take to eliminate debt as your business goes under. This is far too simplistic and, for many business owners, isn’t even all that realistic. You don’t want to close your doors. You want to save your business from a complicated financial situation. You can use bankruptcy to do it.
For instance, Chapter 13 bankruptcy gives you debt reorganization options so that you can keep operating after the case closes. It reorganizes your debt and sets up a repayment plan that you can afford based on your current earnings. Then you simply pay the money back over time. You do not have to liquidate your assets, as you would with Chapter 7, and so this doesn’t hinder your business at all.
Far from causing your business to close, the Chapter 13 filing gives you a new way to look at your debt and income, considering income and liabilities to find a way to be profitable in the future. Small businesses often have debt. That’s fine. Chapter 13 just makes the debt affordable again.
It’s important to have the right outlook when considering these more complex forms of bankruptcy. Cast off any assumptions that you may have and carefully consider what options you have to pave the way for a bright financial future. You may not have earnings in the millions, but even small, solo businesses can follow these steps. If you’re facing a difficult situation with your own company and your personal finances right now, just be very sure that you really understand all of your legal options.