Starting a business venture is an exciting undertaking. However, sometimes things do not work out as planned, and you might accumulate massive debt. You can choose to file for Chapter Seven bankruptcy, which will help you wind down your operations. Filing Chapter Seven for a small business works well when you want to discharge your responsibility for debts from the small company. It will help you avoid losing all your valuable assets to creditors. Here is what you need to know about filing Chapter Seven for a small business.
The Debt You Will Eliminate
There are several debt types you can write off in Chapter Seven. These include utility bills and credit card debts. You can also let go of loans and various consumer borrowing. The process also allows you to eliminate secured loans. The only difference in this process is that you would have to give back part of the property listed as collateral for the loans. Some of the debts you might not scrap in Chapter Seven include taxes and obligations to support children and spouses. You also cannot eliminate debts you have incurred through fraudulent activities.
The Possibility to Keep the Business
Losing a business is never easy. Even as you battle insolvency, you might be thinking of the possibility that you can keep the business and keep it afloat. The chance of retaining the business will depend on its type and whether you can exempt property that will help you keep it operational. You can keep the company if the trustee is not allowed to sell part of the company or the company as a whole. For example, if you are a landscaping contractor, you can continue selling your services. However, the trustee might sell your equipment and recover some of the debt you owe.
Deciding Whether to File
The decision to file bankruptcy is not easy. You have countless factors to weigh beforehand. Your main worry in Chapter Seven will be losing valuables. However, the trustee looks at the amount of debt you owe and your assets before determining whether you should file or not. If your valuables exceed the debt, it is better to negotiate a direct repayment plan with the creditors.
You can discuss these questions with your bankruptcy attorney before filing for Chapter Seven after the insolvency of your small business. Get a professional to help you navigate the complex process and reorganize your finances.