Business bankruptcy is one thing that you wouldn’t want to think about, particularly in regards to your company. However, filing for business bankruptcy can be a smart move. Come kinds of bankruptcies for companies will let you keep your business as others relieve you from the burden of debts.
Business bankruptcy doesn’t imply that your life is over, or you are a failure. It would be best if you realized that there is life after any challenges, business bankruptcy included. The most important thing is to focus your energy and continue believing in yourself. Besides knowing what makes business owners consider filing for business bankruptcy, you also need to know about various kinds of business bankruptcies.
Circumstances Where Filing Business Bankruptcy can Make Sense
Filing business bankruptcy won’t cross your mind when your business is doing well. In most cases, the possibility of bankruptcy arises when your business is experiencing hardships. You might be in the last phase of the business lifespan, known as the decline stage, where you lose the competitive benefit and are ready to close down. Maybe you could’ve made errors during the initial stage of the business, and you’ve lacked to make a profit.
Business bankruptcy is designed to protect your personal properties in case your business fails or you can’t pay back your loans. In this case, filing business bankruptcy lets you ignore your mistakes and concentrate on the progress. Whether the progress entails opening a new business, reinventing your existing business, or exiting the business world to find something you love doing, you need to view business bankruptcy as a fresh start.
Forms of Business Bankruptcy
There are three forms of business bankruptcy. Some will apply to specific kinds of business and have restrictions on the loan that is permitted. They all have various functions based on your objectives and the condition of your funds. Since filing business bankruptcy is a serious move, you need to know how to choose the best.
First, you need to concentrate on what you intend to achieve with the bankruptcy. Maybe you intend to pay for debts, improve the value of the business, or reduce the losses such that you can begin a new business. Irrespective of what you want to do, knowing the objective of business bankruptcy is vital for successful results.
Types of Business Bankruptcy
This kind of business bankruptcy is utilized when debts are too much to repay. It’s also utilized when a business has no properties.
If you believe you can revive your business and turn everything around, this is the kind of business bankruptcy to consider. You will need to submit a reorganization strategy that indicates how you will transform your business plan to pay off your debts. Remember that the court will approve the business plan and assign a trustee to supervise it.
Chapter13: Personal Bankruptcy
This kind of business bankruptcy is designed for sole proprietorships. While it’s the same as chapter 11, it’s for people instead of companies. When filing for personal bankruptcy, you will need to submit a plan that indicates how you intend to pay your debts.