If your small business is plagued with unmanageable debt, bankruptcy might be the best solution. Depending on the type of bankruptcy filed, you can eliminate or restructure your debt or liquidate your business assets. Before you decide, it's important to understand some essential facts about bankruptcy for small businesses.

Determining Liability

Before exploring bankruptcy, you must know who is liable for your small business’ debts. If you are a sole proprietorship or a general partner in a partnership, you are personally responsible for any business debts. If you are a corporation of limited liability company (LLC), you are not personally liable as long as you have not personally cosigned for or guaranteed the business debt yourself.

Types of Bankruptcy

Most small business owners utilize one of three main types of bankruptcy. Chapter 7 bankruptcy liquidates assets that are used to pay off debts, and the business is typically shut down. Chapter 13 bankruptcy is available only to sole proprietors, and business debts are considered personal ones. This chapter restructures your debts into a more manageable repayment plan for your current financial situation. Chapter 11 bankruptcy is also an option, though it is much more complex than Chapters 7 or 13; it involves restructuring debts for business owners who want to keep their enterprises open and operational.

Working With a Bankruptcy Attorney

If you're considering bankruptcy for your small business, talking to an attorney is the best place to start. A lawyer will help you identify your goals for your business and the best avenues available to get you out of debt. An attorney also ensures all proper procedures are followed and the full protection of the law is on your side.

If your small business is facing bankruptcy, get in touch with the lawyers of Cecil & Cecil, PA, in High Point, NC. Call (336) 883-8383 to schedule a consultation, or visit their website for more information. You can also connect with them through Facebook or Twitter. Escape the pressures of unmanageable debt and start navigating your business toward financial freedom.