Bankruptcy is a daunting prospect for anyone, particularly if it involves the potential loss of a business. However, does bankruptcy always lead to business owners having to liquidate their assets?
In truth, the answer will vary depending on the circumstances of each case. Many of your business assets may be exempt from seizure under the rules of bankruptcy. Here’s a little more information about the options:
Filing under Chapter 7 bankruptcy may be an option that is open to you. If your business is small and you are the sole proprietor, then Chapter 7 could allow you to discharge all personal and business debts.
Chapters 11 and 13
Even when filing for Chapter 13 bankruptcy, there are ways to keep a hold of your business. Under Chapter 13, debts are typically reorganized with the purpose of creating a repayment plan.
Larger corporations often take the route of a Chapter 11 bankruptcy. With regards to repayment plans, this course bears some similarities with Chapter 13. Debts are typically reorganized in a manner that allows more significant debts to be paid and repayment plans to be set up for the remainder.
Importantly, whichever bankruptcy route you take will have an impact on your business and financial situation. However, the liquidation of business assets is not necessarily a certainty. Gaining familiarity with bankruptcy laws can help protect your rights and business interests. There may be legal options open to you that could result in being allowed to continue to run your business.