It is always a risk starting your own small business, as many businesses struggle to stay afloat. 2020 has been an especially difficult year for small businesses due to the COVID-19 pandemic and resulting shutdown. Many companies had to halt operations completely or adjust operations to account for contactless and social distancing guidelines. While some small businesses will get back on track, others will be left with nothing but debts they cannot pay.
What are your options if you do not think recovery is possible for your business, and you do not have the funds to settle your company’s debts? Fortunately, Chapter 7 bankruptcy helps many small business owners in this exact situation.
When a business files for Chapter 7, they are agreeing to allow the bankruptcy trustee liquidate the remaining business assets in exchange for a discharge of the company debts. Unlike Chapter 7 bankruptcy for consumers, there are no exemptions that business owners can apply to protect property or assets. Anything the business owns is fair game, and those funds go to your creditors for partial payoffs of your prioritized debts. Then, the court can eliminate your obligation to pay remaining debts.
While Chapter 7 bankruptcy liquidates the company and means you must close your doors, it allows you to move on without worrying about debt collection. This is especially true for sole proprietors or partnerships in which there is personal liability for business debts. Such owners can include their personal debts and business debts in the same Chapter 7 case.
If you have questions about bankruptcy for your business, contact a Melbourne bankruptcy attorney at Harnage Law, PLLC. We are here to advise you of your options, so please call 321.549.7886 or contact us online today.