If you're experiencing financial difficulties with your small business, and you've tried everything to resolve the issue, it's time to consider commercial bankruptcy. Bankruptcy isn't just for big businesses, or individuals; bankruptcy is designed to provide protection for anyone who needs help getting out from under serious financial problems. Luckily, this includes small business owners like yourself. To help you through the process, here are three steps you should take as you prepare to file for commercial bankruptcy protection.
Know Which Chapter to File Under
If you'll be filing for commercial bankruptcy protection, it's important that you know which chapter to file under. There are three different types of bankruptcy chapters that you can choose from, especially since you're a small business owner. Those chapters include:
Chapter 7 bankruptcy allows you to walk away from your business. With this type of bankruptcy, your business assets are liquidated, and your doors are shut. If you're a sole-proprietorship, this option may be best for you.
Chapter 11 allows you to reorganize your business and enter into repayment plans with your creditors. However, your creditors must approve of the repayment plans.
Chapter 13 bankruptcy also allows you to reorganize your business and repay your debts over time. However, this chapter doesn't require approval from creditors for the repayment plan. Instead, your repayment plan is determined by your income and how much you can afford to repay.
Identify all Your Commercial Debts
If you're going to file for commercial bankruptcy, it's crucial that you identify all your outstanding debt. You'll need to document that debt when you file your bankruptcy paperwork with the courts. This is important to note since only the debt you list on your paperwork will be included in the bankruptcy. Unfortunately, that means that you'll continue to be held liable for any debt that isn't included in the paperwork. To protect yourself, start collecting all the documents pertaining to your debt. That way, you don't risk leaving something out. It's also a good idea to have your accountant go over your list of creditors. They may be able to identify creditors that you haven't listed.
Hire a Bankruptcy Attorney
If commercial bankruptcy is your only way out of debt, you need to hire an attorney right away. Failure to work with an attorney could put you at risk for mistakes. Unfortunately, bankruptcy mistakes can cause you problems for years to come. To ensure that your commercial bankruptcy is handled properly, don't start your bankruptcy paperwork without an attorney.
For more information, contact a company like Molleur Law Office today.