It’s not just individuals that get themselves into tough financial positions- businesses of all shapes and sizes may get stuck and need to explore creative options to move forward. Some companies use bankruptcy as a way to settle past debts and find a new way to keep their doors open, and others simply use their filing as a way to quietly close their doors and move on. Too often, people make assumptions about business bankruptcy in San Francisco, and don’t want the stigma attached to such a public record. However, there are many great financial options within bankruptcy that can allow you to meet your goals with the least amount of suffering possible.
If your company is on the rocks, consider talking to a business bankruptcy attorney. In the meantime, here are some frequently asked questions about the process:
Q: What types of bankruptcy are available to businesses?
A: All four types of bankruptcy- Chapter 7, 11, 12, and 13, are open to businesses. However, it’s important to choose the one that will allow you to go in the direction you want to go.
Q: What kinds of debts can be included in a business bankruptcy?
A: Try to categorize your debt by purpose- if these expenses were intended to improve profits, either immediately or down the road, they are probably eligible to be included. These tend to be things like: business loans, business taxes, office or venue rental, equipment purchases or rentals, and transportation costs.
Q: Should I file for personal or business bankruptcy?
A: This depends on the types of debts that you carry. For sole proprietors that carry more “consumer” debt than “business” debt, a consumer Chapter 7 filing is usually best. For those carrying more business debt, talk to an attorney about which business filing is ideal (Chapter 11, 12, or 13).
Q: What will happen to my company if I file bankruptcy?
A: Your goals, your assets/debts, and your local bankruptcy laws will determine what happens to your business after filing. Some types of bankruptcy allow you to keep your doors open and simply restructure your debts, while others allow you to liquidate your assets and debts, in order to close up shop. Filing for bankruptcy doesn’t automatically mean you will have to close or lose everything.
Business bankruptcy is complex and has many different options to suit your financial situation and future goals. Reach out to Primum Law today and request your free consultation to learn how bankruptcy can help you!