Learn About Financial Solutions are Available from Your Local Lawyer
Businesses – and small, local businesses in particular – have taken a hard hit in recent years, and many are struggling. However, there are built-in solutions in our legal system that can help your business in a variety of ways.
As with personal bankruptcy solutions, there is no shame in asking for help. In fact, seeking help from a lawyer who is knowledgeable about debt solutions for businesses can be the very thing that changes your financial future for the better.
Refer to the following solutions that a bankruptcy attorney can provide for your business. Then, learn how to find the best team of bankruptcy lawyers near you.
All About Chapter 11 Bankruptcy
Most business owners are familiar to some degree with Chapter 11 bankruptcy. This form of bankruptcy allows larger businesses to restructure their debt and potentially develop a payment plan while continuing operation of the business.
The downside here is that this is not the best solution for small businesses. Chapter 11 is commonly known because larger corporations seek this solution. Therefore, it ends up being discussed in the media.
Keep in mind, however, that the legal fees are expensive because of the complexity of this form of bankruptcy. If you are a large business, though, it may be worth your time to look into Chapter 11.
An expert attorney will have the skills necessary to help you keep your business running while you work to pay off past debt. Just keep in mind that this solution is not for everyone, and typically not a solution for small businesses.
A Key Perspective on Chapter 7 Bankruptcy
If Chapter 11 bankruptcy already sounds like too insurmountable a challenge, there are many more bankruptcy attorneys who suggest Chapter 7 bankruptcy. This form of bankruptcy is a more affordable solution for business owners.
In this case, a business owner decides they are going to wind-down their business affairs and dissolve the business. Assets for the business are then liquidated to pay creditors. In the meantime, the business owner is protected from lawsuits from creditors.
The downside of Chapter 7 bankruptcy, however, is that you are still personally liable for the debt you owe, as there are some liabilities that can’t be dissolved. These would include sales and payroll taxes. A solution for some businesses, Chapter 7 bankruptcy also poses challenges.
Chapter 7 and 13 Personal Bankruptcy May Be Better Solutions for Small Business Owners
When Chapter 7 and Chapter 11 corporate bankruptcy pose too much of a challenge, it is likely that an expert bankruptcy attorney will recognize a solution that is far more effective than these two forms of bankruptcy.
Because the downsides of Chapter 7 and 11 bankruptcy often involve expensive legal fees, as well as not being able to fully dissolve the business without still incurring personal debt for certain aspects of your business, experts in bankruptcy law – especially those who are local to you and understand the struggles of small businesses, as well as state law – will recommend that you file for personal bankruptcy.
Learn More About Chapter 7 and 13 Personal Bankruptcy
In a personal bankruptcy situation, a superior bankruptcy attorney will show you how to wind down your business and use business assets to pay off personal debt. Then, depending on your income level, you can file for Chapter 7 and 13 personal bankruptcy.
Keep in mind that your income plays a significant role in the form of bankruptcy you can elect as a debt solution. If you are below a certain income level (which your attorney can help determine for you), you may be able to wipe out a significant portion of your debt. This is the solution available to you in Chapter 7 bankruptcy.
However, if you are over a certain income threshold, you would file for Chapter 13 bankruptcy, which sets you on a payment plan of three-to-five years, in which time you will pay off remaining debts. Both of these solutions are seen as highly effective for small business owners.
If, on the other hand, you want to keep running your business, you can still file for personal bankruptcy. It is important, however, that your business is structured as a sole proprietorship, not as a corporation. As a sole proprietorship, your business and personal debt are considered one-in-the-same. If you are not registered as a sole proprietorship, personal bankruptcy isn’t going to remove any of the debt your corporation owes.
When you restructure your business as a sole proprietorship, making your personal debt and business debt the same, you can file for personal bankruptcy. Personal bankruptcy will help dissolve your business debt, while also allowing you to claim “tools of the trade” for your business (up to $60,000 of business assets). You will want these important assets as a way to keep your business going. This way, those assets are considered personal assets for your sole proprietorship, and not assets that would be liquidated if you were filing for bankruptcy as a corporation. This enables you to continue operating your business.
How to Find the Right Bankruptcy Attorney
As we’ve mentioned, you will certainly want to look for attorneys who are local to you if you’re considering filing for bankruptcy. They will likely have your best interests at heart because they are committed to the economic success of your region, and understand how hard it is to keep a small business open. Local attorneys are well-versed in state law and will help develop a strategy that is effective and affordable for you.
The best way to research bankruptcy attorneys in your area is to search for the ones who see personal bankruptcy as a viable solution for a business owner, and who have offices near you. Then, you can read reviews of their service as well as learn their perspective on bankruptcy and business owners from the FAQs on their website. You’ll get a sense of whether a particular firm is on your side and wants to steer you in the direction of the least-expensive solution that has the most value for your financial future.
Remember, bankruptcy isn’t like the cartoonish portrayals we see on TV or in the movies, where everything is taken away until a person has nothing left but an old jalopy and an empty house. In fact, bankruptcy can be empowering, and has set many people – and businesses – on the right track toward success.
With the right bankruptcy lawyer firm, you’ll end up feeling strengthened by the solution at hand, and can begin to see the possibilities for a fresh start.