Owning a small business is a huge responsibility that can be both stressful and rewarding.  Over the past decade both individual consumers and small businesses have felt the wrath of an economy going downhill.  While the economy has seemingly begun to pick up the pieces recently, many consumers and small businesses are still fighting an uphill battle to eliminate and manage a substantial amount of debt.  If you are a small business owner, you may believe that Chapter 11 bankruptcy is the only option for businesses of any kind to file for bankruptcy.  While Chapter 11 bankruptcy is an option of choice for some businesses (typically much larger ones), small business owners may have the option of filing Chapter 7 or Chapter 13 bankruptcy given that a few requirements are met.  Thus, as a small business owner, you may choose the method of bankruptcy that will work best to achieve your goals.

Is Chapter 11 Right for My Small Business?

Chapter 11 bankruptcy is a popular option for very large businesses because the key characteristic of Chapter 11 bankruptcy is that all of the business’s debt is reorganized over a period of time through a repayment plan.  Chapter 11 bankruptcy has helped numerous businesses climb out of a deep hole of debt, but filing for Chapter 11 bankruptcy is pretty expensive.  So, while Chapter 11 bankruptcy may be able to get your small business out of debt in the most efficient way possible, you must consider the added cost of this method of bankruptcy.

Chapter 7 and Chapter 13 Bankruptcy for Small Businesses

If you do not believe Chapter 11 bankruptcy is suitable for your small business financial needs, you should consider whether or not Chapter 7 or Chapter 13 bankruptcy can most effectively help you eliminate small business debts and get the business up and running again.  Both Chapter 7 and Chapter 13 bankruptcy are often used by consumers to manage credit card and other personal debt, and has proved to be successful for many small businesses as well.  If you do not plan to continue your business, and only wish to satisfy the business debts, you may be able to file for Chapter 7 bankruptcy so long as your business is a partnership, corporation, limited liability company, or other business entity.  As is the case with individual consumers, Chapter 7 bankruptcy will liquidate all available assets in order to satisfy the outstanding debt.

If your small business is a sole proprietorship, you may consider Chapter 13 bankruptcy as a means of eliminating your business debt.  However, it is very important to make clear that no business entity can file for Chapter 13 bankruptcy, so if your small business is a partnership, corporation, limited liability company, or other business entity, you must either use Chapter 7 or Chapter 11 bankruptcy as a means of eliminating business debts.  Having a sole proprietorship makes it possible to file for Chapter 13 bankruptcy simply because you as an individual consumer and you as a sole proprietorship are considered the same entity, and because individuals can file for Chapter 13 bankruptcy, you, as a sole proprietorship, can file for Chapter 13 bankruptcy. 

Contact Kansas City Bankruptcy Attorney Douglas Breyfogle to Schedule a Free Consultation

Small businesses have felt the economic downturn just as much as any consumer, especially because small business owners are consumers themselves, and must stay afloat both as an individual consumer and as a small business owner.  Because many people believe that Chapter 11 bankruptcy is the only option for businesses to eliminate debt in an organized way, many small business owners do not consider the other bankruptcy options available to them.  Douglas Breyfogle is a Kansas City Bankruptcy Attorney with more than twenty years of experience helping Kansas City consumers and small business owners.  With the help of Douglas Breyfogle, you will be able to choose the method of debt-elimination and/or management that suits your needs the best in order to get up and running again.  While bankruptcy for small businesses may be a little trickier than it is for consumers, it is still possible and as is the case with any substantial amount of debt, it is important to act as quickly as possible to begin your path to financial recovery.  To schedule a free confidential consultation with Douglas Breyfogle, contact our office today by calling (913) 742-8700.