Business Bankruptcy: Chapter 7, 11 and 13

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Filing for bankruptcy protects a business owners
personal assets when their business fails or
unable to pay debts. When going through financial
hardship, this action may prove to be entirely
appropriate. However, before filing, you must
consider why you should file first. Is your
business in growth or in decline? If declining,
will you be able to regain your business
competitive standing? If you decide instead to
reorganize, do you have enough revenue and other
assets that will let you continue? In cases like
this, its best that you look for a financial tax
advisor that will help you review your business
standing. Below are the three main types of
bankruptcy that you can file for your business.
These are named as chapters according to where
they are in the Bankruptcy Code of the US.
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When youve evaluated that your business may
have no feasible future, filing the Chapter 7
bankruptcy is your option. Known as the
liquidation, this type of bankruptcy is for
businesses with overwhelming debts that even
restructuring them will still not work. This can
be used by sole proprietors, partnerships, as
well as corporations. Another situation that
Chapter 7 may be used is when there are no
substantial assets that remain in the business.
Chapter 7 Liquidation
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Chapter 11 is ideal for businesses evaluated as
having a chance to regain their competitive
standing in the market. This is also usually for
partnerships and corporations. Here, the company
will plan how they will go through a
reorganization and continue their operation under
trustees appointed by the court. Basically, ways
on how they will pay their creditors over
time. 
Chapter 11 Business Reorganization
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This is reserved for sole proprietors. When
small businesses would instead opt for
reorganization than liquidation, Chapter 13
bankruptcy is the solution. Sole proprietors will
file a repayment plan, presenting to the
bankruptcy court on how they will repay their
debts. The repayment amounts also depend on the
owners income, debt, and assets.
Chapter 13 Personal Bankruptcy
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As mentioned, hiring a financial tax advisor will
help you determine if bankruptcy is the best
answer to your problems. Certified Public
Accounting Firms such as ours at Prestige
Accounting Solutions in Atlanta offer
pre-bankruptcy counselling. Here, we will
thoroughly review your options with you!