New Jersey Small Business Bankruptcy Lawyer
Opening a small business is as exciting as it is terrifying. There are countless risks, and it requires investing a significant portion of your own funds, not to mention the level of time and energy required to cultivate a thriving enterprise. Unfortunately, even with the best of ideas and a solid work ethic, many small businesses fail. For example, nearly 60 percent of restaurants fail within the first year, and a staggering 80 percent close by their fifth year. If your small business has been losing money and is on its last legs, especially in the current economic climate, you are far from alone.
There may be hope for your enterprise yet. Filing for small business bankruptcy may allow your budding business to get out from under crippling debt, letting you either keep your business afloat through reorganization or reinvest your money in another enterprise. If you are going to close either way, filing for the proper bankruptcy will allow you to preserve as much of your investment as possible and help you avoid personal liability for business debts. The small business bankruptcy attorneys at Lance Brown & Associates understand the struggle of small business ownership, and we know how to best evaluate your options for financial relief.
Types of Small Business Bankruptcy
There are a few different types of bankruptcy that small business owners can file. Each carries its own advantages and drawbacks, and each may be more or less appropriate depending on the specifics of your business and financial situation. It is vital that you consult with a knowledgeable and experienced small business bankruptcy lawyer before filing for bankruptcy to ensure that you choose the best form of bankruptcy and proceed in the manner most advantageous to you and your company.
Chapter 7 for businesses
Chapter 7 bankruptcy may be filed by either individuals or business entities, such as corporations and partnerships. If your business is going to close, Chapter 7 might be the right option for you. Chapter 7 involves liquidating the business assets, which all become part of the bankruptcy estate, and using the proceeds to pay back as much of the company’s unsecured debts as possible. The remaining covered debts will fall away, and individual owners will not face liability unless they personally guaranteed business debts. Especially if you personally guaranteed debts of your business, consult with a small business bankruptcy attorney before pursuing Chapter 7 bankruptcy.
Chapter 13 for individual business owners
Chapter 13 bankruptcy is technically only available to individuals, meaning that your small business cannot file for Chapter 13 bankruptcy. However, there is a bit of a workaround: If you own a business as a sole proprietor, then you are essentially indistinguishable from the business. You are personally responsible for the business debts already. You then have the option to file for a Chapter 13 bankruptcy, which involves restructuring your debts into a repayment plan to be repaid over a three or five-year period. Your other, non-business assets (property and income) are subject to the bankruptcy, as this would be an individual filing. You can use Chapter 13 to protect exempt business property and continue to operate even while the bankruptcy is ongoing.
Chapter 11 for businesses
Chapter 11 bankruptcy allows a corporation or partnership to reorganize its debts in order to continue operating. Additionally, in certain cases, an individual business owner whose debts exceed the limits set by Chapter 13 might be able to file under Chapter 11. Like Chapter 13, Chapter 11 involves restructuring debt into a more feasible payment plan.
Chapter 11 allows a business to work with creditors to structure business debt to pay back business debt over time while continuing to conduct business. Creditors are prohibited from seizing assets or suing the company until the bankruptcy is completed, at least not without court approval. The business is beholden to the court before making significant financial decisions as well. Chapter 11 bankruptcy tends to involve intense negotiations with creditors, which is one of the many reasons it is important to have a savvy and effective small business bankruptcy attorney in your corner.
Get Help from a Seasoned New Jersey Small Business Bankruptcy Lawyer
If you are having serious financial trouble, don’t wait until the creditors are banging down your door, and don’t torture yourself with sleepless nights filled with worry and anxiety. Call Lance Brown & Associates at 609-587-5100 to find real solutions and effective, lasting debt relief.