Bankruptcy isn’t the dream situation for anyone starting their own business. But unfortunately, it is a reality for some businesses – large and small.
One of the biggest risks you take with opening a business is not making enough money to pay off the debts you owe.
As a result of COVID-19, more and more businesses are finding this to be true and are closing their doors. Some even having to consult a bankruptcy attorney.
Stay-at-home orders have small businesses struggling to shift their business model. And in these times, that has caused them to struggle to maintain their income.
What is bankruptcy?
Bankruptcy for small businesses takes place when they are unable to repay its debts. Of course, the exact process and the results may vary based on your situation.
As a bankruptcy lawyer in Georgia, we focus on two chapter filings:
If you have decided it would be best to close your doors, this can provide you will an orderly process for doing so.
Will bankruptcy help my business?
You’ll want to consider a few things before filing bankruptcy. First, ask yourself these questions. Then, reach out to a bankruptcy attorney near you for more information about your options.
- Is money still coming in?
It is one thing to still be making a profit but facing difficult times. It is another to continue to lose money month after month. Despite hard times, it might be possible to keep the business afloat. And it might actually be best. But you must be realistic about this.
- How does the cost of the liabilities compare to the business assets?
Are the business assets worth more than the liabilities? Are you still making money? If you answered “yes,” saving the business might still be an option. Bankruptcy can help you do this by reorganizing your debts.
- Are you personally liable for the debts?
Closing your doors could mean creditors coming after your personal assets. Discuss your financial situation with your bankruptcy attorney in its entirety. This will protect not only your business but you.
- What form of business do I have?
Is your business a sole proprietorship or is it a partnership? The form of your business will affect the bankruptcy choices available to you. When a business is formed as a sole proprietorship, it is considered an extension of the business owner.An example of a sole proprietorship is Tom Smith doing business as (DBA) Tom’s Tree Services. In this case, the business could not file bankruptcy apart from the sole proprietor.The bankruptcy options available to you as a result of the business formation may or may not be your best solution.