Is Business Bankruptcy the Best Move for Your Business?

Debt-laden small business owners generally have three options:

1. Find a Recovery Strategy with More or New Sales Leads
2. Shut the Doors and Walk Away
3. File for Business Bankruptcy

Though all these options may seem clear-cut, all are more complicated than meets the eye.

This is because each business is different, and all setups come with strings attached.

Case in Point:

When it’s a Good Idea to File Business Bankruptcy in Tavares Lake County Florida

An organic ice cream boutique owner, Jeff, set up shop in the county seven years ago.

Jeff created a plan of action to hit the ground running when he founded his company. He took out a few lines of credit and applied for a loan with a local bank. Jeff was approved, but with one contingency: he had to provide proof of collateral: his home.

Eager to win and optimistic that failure wouldn’t be in his cards, Jeff handed in the paperwork and got to work.

Initially, business was great. Soon, though, local grocers started offering a wide range of organic ice cream flavors at more competitive prices. With decreasing sales, it became harder for Jeff to meet his loan payment requirements.

In this case, Jeff was unable to simply walk away and carry on with life, because he secured his loan with a personal asset: his home.

A bankruptcy lawyer in Tavares Lake County Florida would advise Jeff to file business bankruptcy in order to continue living in the home.

How to Determine if Business Bankruptcy is the Smartest Move

The best way to answer this question is to consult with a seasoned attorney in Lake County that practices law in this niche.

The scenario above provides a general example.

Various circumstances could have affected Jeff’s eligibility to file business bankruptcy.

An attorney can review your case in detail and provide a clear answer, including the type of business bankruptcy to file.

Overview of Business Bankruptcy Types

There are two main options to consider when filing business bankruptcy. These include:

• Chapter 7 Bankruptcy
• Qualified Assets Are Liquidated for Settling Portions of Debt

• Chapter 11 Bankruptcy 
• A Repayment Plan is Set Up, Offering Businesses an Opportunity to Remain Open

A Moot Point: What Type of Business Should You Set Up

If you’re an up-and-coming small business owner, consult a business   now.

Campione & Hackney Attorneys at Law, for example, may recommend setting up one of two entities, based on the circumstances of your case. These include:

• A Limited Liability Company (LLC) | A Corporation

These setups generally protect your personal assets in the event of a bankruptcy filing.

It is important to note, however, that even with these systems in place, there are still loopholes that could put your personal assets at risk.

To reduce vulnerabilities from the get-go, get in touch with Campione & Hackney.