Your business is supposed to generate income for you and your family. When it does the opposite and costs more than it makes, it may be time to cut your losses. Aside from selling the business, you have two options: winding it down yourself, or filing for Chapter 7 bankruptcy. Whether you choose to look up how to file bankruptcy will depend on your individual circumstances. The Gil Law Firm in Dothan, AL, breaks down the pros and cons of each approach.
When you file for Chapter 7 bankruptcy, the task of winding down your business is handed over to a trustee who will charge a fee to liquidate assets, distribute the money among your creditors, and close down operations. The good news in this case is that the process is no longer your responsibility. With the business out of your hands, there will be a buffer between you and your creditors, allowing you to escape the stress of the situation.
For many people, though, the downside to this situation is the loss of control. A bankruptcy trustee may make decisions you disagree with, selling assets for less than you might have received from a more strategic buyer. Your business practices will be open to scrutiny and the whole process will be a matter of public record, which may be more attention than you want.
If you choose to liquidate the business yourself, you trade the convenience and relief of handing over the reins for fine control over the process. You'll have the opportunity to look for buyers who fit your criteria and manage the information that reaches the public. On the other hand, you'll be dealing with your creditors directly, and satisfying them without the court backing you up may be difficult. Ultimately, many business owners use a hybrid approach: handling as much of the wind-down as possible, then filing for Chapter 7 bankruptcy.
If you're considering Chapter 7 or Chapter 13 bankruptcy, The Gil Law Firm can help you choose the path that will work best for you. Contact them at (334) 673-0100 to arrange a consultation, or learn more online.