When you started your business, you likely had visions of money rolling in and being your own boss. You knew there would be challenges, but you had a vision for success.
It can be devastating when your business hits challenging times or does not hit the streak of success you hoped for. As you look at your options, bankruptcy may be the best way to deal with overwhelming debt.
Here’s what you should know about Chapter 7 and Chapter 11 bankruptcies.
Distinguishing 7 from 11
Bankruptcy can feel like a confusing topic. There are several different types, and each has rules and restrictions for how it operates.
Chapters 7 and 11 bankruptcy are the types most often used for businesses looking for debt relief. In broad strokes, Chapter 7 bankruptcy means you will need to liquidate all or most of your business’s assets. In contrast, Chapter 11 allows you to keep your assets and restructure your debt.
Evaluating your circumstances
Bankruptcy can be an important decision that has a lasting impact on you and your business. As you consider your situation, you should look at your long-term ability to repay your debt and whether restructuring is a viable option.
What happens next?
Going through the bankruptcy process can take some time. One of the significant advantages of getting started is getting relief from your creditors.
Regardless of what type of bankruptcy you choose, an automatic stay will stop many of the challenges that come with overwhelming debt, including:
- Harassing phone calls
- Wage garnishments
Although you will still have several steps to finalize the bankruptcy process, the automatic stay can give you some quick relief while you start making progress on resolving your debt.