When a business is struggling to make ends meet, they may not be unsure of where to turn. If a business owner isn’t sure of what to do, it may be time to consider filing for bankruptcy. There are two types of bankruptcy that businesses can consider so it is important to determine which option is best.
Chapter 7 Business Bankruptcy
When a business files for Chapter 7 business bankruptcy, it is often because debt restructuring simply isn’t practical for the company. This is a liquidation option and requires the business to pay off as much debt as they can. This often means that the business will have to close down but it does mean that the business owner can walk away without the burdens of the business’ debt. Chapter 7 is typically best for businesses that have very little potential to make a profit simply due to the amount of debt.
Chapter 11 Business Bankruptcy
A Chapter 11 business bankruptcy allows the business to restructure their debts while keeping the business open. The primary goal is to allow the business to get rid of overhead costs and eventually become profitable. The business can pay off some of the debts over a period of 5 years.
If you have questions about business bankruptcy, contact our firm today.
Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 25 years. If you are in need of experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.