Starting a small business is exciting. However, if you are not careful, your debts can quickly pile up. You may not be able to make payments and could be facing foreclosure on your building or other disastrous things. Therefore, it might be in your company’s best interest to file for bankruptcy.
There are primarily two types of bankruptcies available to small-business owners, and the first is Chapter 7. This type is recommended to companies that are sole proprietorships. Not only are all your business and personal debts wiped clear, but your business assets will be protected. However, it is important to keep in mind that with Chapter 7 you are essentially closing up shop with your business.
Chapter 13 is the other type of bankruptcy that small-business owners can use. After filing, a repayment plan will be developed that will allow you to pay off your debts more easily. It also protects your assets. However, Chapter 13 takes longer to finish than Chapter 7, but it does allow you to prioritize which of your debtors gets paid first.
There are numerous nuances of the law, and you may require assistance to figure out which type is best for you and which one will allow you to continue your business operations. Contact The Law Offices of John A. Foscato in Green Bay at 920-432-8801 to learn more about the law surrounding small business bankruptcies.