Having your Little Rock business in debt can be a scary experience. Fortunately, there are steps you can take to help protect you and your business, including filing for bankruptcy.
Filing for Bankruptcy
Bankruptcy is an informed choice when your business is in debt, and you have creditors after you. At the least, it can provide your bankruptcy attorney in Little Rock with adequate time to find a solution to your problem.
You need to put a lot of thought, however, before you file for bankruptcy. After all, there is no guarantee which of your properties you can keep after the fact.
As such, you have to prepare yourself, depending on your circumstances, of course.
• Filing as a Sole Proprietorship
Due to the nature of a sole proprietorship, you have the option of either filing for Chapter 7 or Chapter 13 bankruptcy if you meet the requirements for both.
You can use Chapter 7 or Chapter 13 to satisfy and wipe out your personal and business debts.
• Filing as a Corporation Shareholder, General Partner, or LLC Owner
If you are a corporation shareholder, general partner, or LLC owner, and you waived your limited liability, like personally guaranteeing a loan for the business, filing for bankruptcy unfortunately will not protect you.
After waiving your limited liability, you have become personally liable for a few or all the business debts of the company. In this case, your only way out is to file for personal bankruptcy.
If you are qualified, you can file for either Chapter 7 or Chapter 13 bankruptcy.
With a Chapter 7 bankruptcy, a trustee will liquidate or sell all your eligible property to satisfy your personal debts, including the debts you have taken on behalf of the business.
At the end of the process, the bankruptcy court can wipe out your debts by discharging your bankruptcy.
With a Chapter 13 bankruptcy, you will need to propose a repayment plan that will be based on your income to the bankruptcy court.
Under this procedure, you need to show the court how you plan to pay your debts over a period.
Unlike with Chapter 7 bankruptcy, however, you will not have to liquidate your properties.