Is your business in a tough place financially? It may be necessary to file for bankruptcy if you have debt piling up. This can help you to get a brand new financially fresh start, and still maintain your business. There are several different choices when you are considering bankruptcy. You will want to take a close look at your company' financial situation and figure out the best way to get your business up and running again.

One option is a Chapter 7 bankruptcy. This is also known as liquidation, and is a great idea if you want to get rid of a lot of inventory and put the finances towards satisfying debt. Chapter 7 bankruptcies serve to liquidate a business' assets in order to remove all debt in exchange for a lasting mark in the credit. In some cases, this may mean the end of the business. In other cases, the business can be salvaged during the bankruptcy and the business may be able to continue. In most cases, a Chapter 7 is the end of a business and is the best way to get rid of leftover inventory when a business is already going downhill.

If you own a store, for example, you may be able to sell all of the clothing at lower prices and then put all of the profit towards your debt. Only some businesses will qualify for a Chapter 7 bankruptcy, as the business will need to prove that they are under the median income in the state. You can talk specifically about this with a lawyer in your state and learn whether or not you qualify for this bankruptcy chapter.

Another choice is a Chapter 11 bankruptcy. This form of bankruptcy is almost always for business purposes. Chapter 11 bankruptcy can allow you to hold off creditors and form a new plan that will help you to pay off the debts that you have accumulated. Chapter 11 bankruptcies are almost always the way to go for larger businesses.

Whenever a business files for this chapter, they are required to prove to the court that they have a chance of profitability post-bankruptcy. This is because the courts will need to rest assured that the business will generate enough revenue to repay creditors consistently based on the terms of a repayment plan. Chapter 11 bankruptcies are the most costly option, so it is not a wise decision for businesses that are very deep in debt. Sometimes, businesses can spend anywhere from $10,000 to $50,000 on legal fees in a bankruptcy of this nature.

Lastly, businesses can choose a Chapter 13 bankruptcy. This is similar to a Chapter 11 but is often more inexpensive. A Chapter 13 is another repayment plan bankruptcy and does not require a liquidation of assets. Instead, the court will create a structured repayment plan that individuals are required to adhere to. The payment plan is set on a fixed schedule and the business will be required to pay a set amount of many to the repayment plan each month or every few weeks. Oftentimes, the courts will consolidate all debts into one big bundle so that the are easier to manage.

Chapter 13 bankruptcies are only available to sole proprietors or married couples who did not form a separate legal entity for their business. Business owners who choose a Chapter 13 bankruptcy will need to file the bankruptcy in their name, not the name of their company. This can be frustrating, as the bankruptcy will damage the business owner's credit severely. If you want to learn more about the different bankruptcy options and which is best for you, contact a skilled local bankruptcy attorney. Use our directory to locate a bankruptcy lawyer near you that can help you with your case!