Over <\/span>38,000 businesses<\/span><\/a> filed for bankruptcy in 2017.<\/span><\/p>\n This is a larger number than most people assume. However, filing for bankruptcy is sometimes an inevitable decision for institutions.<\/span><\/p>\n What’s more, bankruptcy is not the equivalent of commercial doomsday. If filed correctly, it can actually enable business owners to create a fresh financial slate for <\/span>.<\/span><\/p>\n If your business appears to be going under, it’s important to understand the elements of commercial bankruptcy.<\/span><\/p>\n Read on for insight into declaring bankruptcy as a business in the U.S.<\/span><\/p>\n Business owners may file for bankruptcy for a variety of reasons. Most choose to do so upon deciding that the business has failed and is unable to proceed.<\/span><\/p>\n Businesses can fail due to changes in the economy, an unsuccessful business plan, shifting profit margins, or lack of product demand.<\/span><\/p>\n Business failure essentially means that operating the business in question is no longer a financially viable option.<\/span><\/p>\n In most cases, failed businesses don’t just vanish from the commercial scene. Many owners face unresolved debt and assets.<\/span><\/p>\n This is where bankruptcy comes in.<\/span><\/p>\n Declaring commercial bankruptcy enables a bankruptcy court to help business owners consolidate and\/or eliminate remaining debt. Debt elimination often comes in the form of asset liquidation or reorganization.<\/span><\/p>\n There are three different types of bankruptcies available to business owners: Chapter 7 (liquidation), Chapter 11 (reorganization), and Chapter 13 (personal bankruptcy).<\/span><\/p>\n Filing for bankruptcy is not necessarily a complex process. However, following some key steps can ensure that the process is as straightforward as possible.<\/span><\/p>\n In some cases, declaring bankruptcy may not actually be the most financially sound decision.<\/span><\/p>\n Some business owners, for example, may be able to effectively manage outstanding debt by negotiating with creditors, consulting a business debt management counselor, or reaching out to an attorney.<\/span><\/p>\n If you own a variety of assets or have a savings account, these can contribute to debt elimination.<\/span><\/p>\n Some businesses may find success in transferring their product lines to a fully digital platform. <\/span><\/p>\n This can keep the business alive while reducing property management and employee costs.<\/span><\/p>\n Still, others manage to pay off debt through asset liquidation and return to ground zero. While this does not result in any profit, it can keep credit scores intact.<\/span><\/p>\n If you have decided that bankruptcy is the only solution, carefully select the type of commercial bankruptcy that suits your business.<\/span><\/p>\n Most business owners file for Chapter 7 or Chapter 11 bankruptcies. The former manages debt through asset liquidation. The latter eliminates debt via reorganization.<\/span><\/p>\n Chapter 7 bankruptcy is ideal for businesses that do not have substantial assets that can help restructure debt. Chapter 7 bankruptcies usually involve a hefty amount of accumulating debt and result in the dissolution of the business.<\/span><\/p>\n Chapter 11 bankruptcies are suited for businesses who are hoping to stay afloat in the future. <\/span><\/p>\n They involve a reorganization of debt, which results in structured payment plans to creditors over a long period of time.<\/span><\/p>\n Chapter 11 bankruptcies enable a business to stay in existence.<\/span><\/p>\n At the end of the day, choose your type of bankruptcy based off of total assets, nature of debt, and intentions for the future.<\/span><\/p>\n Filing for bankruptcy does involve an <\/span>. Business owners have to submit a petition for bankruptcy, which includes their intention for filing.<\/span><\/p>\n Individuals filing for bankruptcy must also complete a host of documents called “schedules” that detail assets, income, expenses, codebtors, creditors, liabilities, and more. All of these forms are <\/span>available for download<\/span><\/a> at the United States Courts website.<\/span><\/p>\n These can feel tedious to complete; however, they are designed to give the bankruptcy court a holistic perspective on your financial situation. This is true regardless of what type of bankruptcy you are filing for.<\/span><\/p>\n When filing for Chapter 7 bankruptcy, business owners will likely have to undergo credit counseling prior to submission of their application. Credit counseling occurs with an approved agency and results in a certificate that must be attached to a bankruptcy petition.<\/span><\/p>\n There is a filing fee associated with declaring bankruptcy. These fees change annually, so it is important to check with your local court about current rates.<\/span><\/p>\n If you are unable to afford the filing fee, it is possible to apply for a fee waiver. This form is accessible via the United States Courts website.<\/span><\/p>\n Many business owners are uncertain about where to actually file their bankruptcy petition.<\/span><\/p>\nWhat Does Declaring Bankruptcy Mean?<\/b><\/h2>\n
Steps to Filing Bankruptcy<\/b><\/h2>\n
1. Decide if Bankruptcy is the Right Decision<\/b><\/h2>\n
2. Choose Type of Bankruptcy<\/b><\/h2>\n
3. Complete Bankruptcy Documents<\/b><\/h2>\n
4. Submit Your Petition<\/b><\/h2>\n