As a business owner, you have a litany of important considerations you must make on a daily basis to ensure the success of your company. However, when times are tough, understanding what you can do is critical. Generally, you may wonder whether or not filing for bankruptcy can help your business stay afloat or if it will force you to close. The following blog explores the different options that business owners should consider before filing. Additionally, you’ll learn how a Memphis, TN business bankruptcy lawyer can help you through these challenging times.
What Are The Different Bankruptcy Options For Business Owners?
If you run a business and you’re struggling financially, it can seem like closing your doors and abandoning the work you’ve put in to establish your business is the only option. However, it’s important to understand that closing your doors is not necessarily the only thing you can do.
For most businesses, the two options are filing Chapter 7 or Chapter 11 bankruptcy. Chapter 7 involves the liquidation of assets to repay creditors. Unfortunately, almost all businesses that pursue this option do shut down. However, you can opt for Chapter 11 bankruptcy instead. This allows you to reorganize your debts into monthly payment plans. However, this process can be more expensive and last up to five years.
If you are a sole proprietor, you may also be able to file Chapter 13. This is a form of individual bankruptcy but can assist you in reducing personal debts, thus allowing you to decrease debts associated with your business. This is also a reorganization plan.
Should I Keep My Business Open?
Determining whether or not you should look to file for bankruptcy is an incredibly important decision. However, in addition to deciding if this is right for you, you’ll need to carefully consider whether or not you want to keep your doors open. Though the answer is likely yes, there may be instances in which closing could be in your best interest.
Generally, if your business is constantly losing money, it may be in your best interest financially to close. Similarly, if you have more liabilities than assets, closing may be recommended. However, there are instances in which staying open may be preferred. If you have a profitable company and the challenges you’re facing are temporary, bankruptcy can help. Additionally, if you’re generating profit, reorganizing is likely in your best interest.
As you can see, many factors can influence whether or not your business should close during bankruptcy. However, connecting with the team at the Arnold Law Firm can help give you the best opportunity to do what’s best for you and your company. Our firm will help you explore all your options so you can feel confident in whatever decision you make. Contact us today to learn more.
