They say that to start up a business, you should plan to have at least five years of savings to support your business without profiting by a single dime, and if you can make it past the five years, your business has a higher potential for long-term success. The truth is, any company can experience financial turmoil at any point, be it two days or two centuries into service. The industry for which your company operates may fluctuate, or an unforeseen public catastrophe may drive business away. At what point do you decide to file for bankruptcy?
Small Business Bankruptcy
In some cases, but not all, you may be eligible to continue your business operation after filing for bankruptcy. Bankruptcy is an option when a company has accumulated more debt than the profit it is bringing in, with no hope of catching up. There are two options for small businesses, which become a decision based on the future goals of the operation. If you would like to try to remain in business but need help with the accumulating debt, Chapter 11 bankruptcy may be an option where debts reorganize. If quietly closing the doors on this business and this part of your life is the best avenue, Chapter 7 will be the better option.
How to Decide If Bankruptcy Is Necessary
When you began your business, you determined what sort of financial structure you preferred. Did you want to be a sole-proprietorship? A limited-liability entity? A partnership? Believe it or not, this may play a role in your determination of if the bankruptcy process is right. If your business is a corporation, LLC, or other entity with limited liability do not have as much of a risk on their personal assets and may choose another option. Other factors to consider include:
- Are my personal belongings at risk?
- Do you know how much you owe?
- Will your situation improve shortly?
- What types of debt have accumulated?
- Are you putting daily necessities on credit cards?
- Do you accept the downside of bankruptcy?
- Will you be in a better place if you file?
Still Need Help Deciding? Call a Libertyville Bankruptcy Lawyer
If you have hit a financial roadblock and are not sure what else to do, it is in your best interest to contact a specialized lawyer. The choices you make today affect not only you but your family for potentially the rest of your lives. It is best to make a guided decision. If you would like to discuss your situation with a Lake County bankruptcy attorney, contact the offices of Newland & Newland, LLP today. We are proud to offer you a free and completely confidential initial consultation when you call 847-549-0000.