If you own a small business that is struggling financially, declaring bankruptcy might seem like the ultimate failure. In certain circumstances, though, it could actually save the company and provide the footing it needs to thrive in the future. Here is a brief guide to what business owners should know about discharging debt and remaining operational.
The Bottom Line Still Matters
If a company has a small profit margin or its assets are worth more than its liabilities, bankruptcy can help when temporary factors are threatening its financial viability. If the company was never profitable from the start, though, discharging debt can’t change that fact. Put simply, declaring bankruptcy could save your business if it is worth saving. By eliminating or reorganizing various debts, you may be able to weather the storm and come out on the other side stronger than ever.
Filing May Be the Only Option
It’s natural to be apprehensive about declaring bankruptcy, especially if you want to keep the company. However, in certain cases, filing may actually be the only way to remain operational. If you have a feasible plan for increasing profitability in the future but need to reduce your overhead to see it through, filing chapter 11 or chapter 13 could help. Both provide protection from creditors, which may be essential for staying in business. If you do not declare bankruptcy, but cannot make minimum payments, creditors can attempt to liquidate the business, which will shut down the company for good.
If your business is floundering and you think declaring bankruptcy could be a strategic financial move, turn to The Gil Law Firm in Dothan, AL. Rafael Gil III is a seasoned attorney who will be happy to evaluate your situation and determine the most lucrative way to proceed. He serves clients throughout Alabama, Georgia, and Florida. Visit the firm online to learn more about chapter 7 versus chapter 13 bankruptcy, or call (334) 673-0100 to schedule a free consultation.