It is natural for small business owners to be distressed and unsure of what steps to take when their businesses begin to struggle. Many think of bankruptcy as a sign of failure, but in reality, bankruptcy is a tool that small business owners can use to reorganize their financial obligations and protect the company.
A small business owner should consider bankruptcy as soon as they realize they are struggling financially. Rather than continuing to sink further underwater, bankruptcy is a viable option to protect any remaining assets, reorganize or discharge the debts, and get a fresh start.
If you are wondering how to pay your debts and keep your business going, instead of seeking yet another unpayable loan, it may be a good idea to talk to a bankruptcy attorney to determine your best option.
Should I File for Chapter 7 or Chapter 11?
Chapter 7 is your best option if you really can’t see any way forward with your business. Perhaps your product has become obsolete, the economic situation has changed dramatically, or some other event has occurred.
In court, a trustee will be assigned to oversee the liquidation and distribution of your company’s assets.
In Chapter 11, the business submits a plan of reorganization that modifies or eliminates a company’s debt. The goal is to allow the business to continue operating in the future.
New Options for Small Business Bankruptcies
With the COVID-19 pandemic, the outlook for many small businesses is grim. Some experts predict as many as 40% will go out of business. The Small Business Restructuring Act was passed in February 2020, and it offers a new option.
Filing for Chapter 11 bankruptcy can be expensive and take a lot of time. This new act streamlines the process and allows small businesses to submit a restructuring plan and have it quickly accepted. It allows the court to force creditors to comply with the new terms they have imposed on loans held by the small business. Thus, the small business can stay in business.
Contact the Certified Bankruptcy Attorneys at Sasser Law Firm
If your small business is suffering and you are wondering how you are going to make it through this trying time, contact us today to discuss your options. We are an experienced bankruptcy law firm, and our lawyers only want what is best for our clients.
Contact Sasser Law Firm today for a free consultation.