Declaring Bankruptcy for Small Businesses
Bankruptcy can knock any door, like that of small business owners. Small business owners in Mississippi can easily get into debt because they are running their own business at a small level that can fail at any point in time for a number of reasons. When a small business starts to fail, the owners go under massive debt which is almost impossible to pay back. In this situation, most owners could consider bankruptcy for small businesses. Many people in Mississippi do not know much about bankruptcy for small business so they file for the wrong one. Let’s find out what is best for small business owners.
Know what you are filing for
Declaring bankruptcy for business can mean any business, including large businesses as well. When a bankruptcy is filed in the name of a business, then you might end up losing a lot of your money and assets. That’s why it is essential that you know about the details of filing a bankruptcy. You can take help from professional attorneys in Mississippi to tell you about bankruptcy. If you file for Chapter 11 bankruptcy, then you can make a lot of trouble for yourself. This type of bankruptcy is usually for large businesses that have a huge amount of assets.
Large businesses are often able to pay back their debt within a specific time period. That is why Chapter 11 is good for large businesses, which have significant assets in hand and can pay their debts.
File for Chapter 13
Chapter 13 is ideal bankruptcy for small business because it does not include asset selling. Small business owners usually don’t have a lot of assets on hand. That is why they have to state their monthly earnings to show that they are eligible to pay off their debts. For this type of bankruptcy, small business owners should be able to repay their debts with the help of their monthly income.
Small business owners need to submit documentations and tax return files to show that they are eligible for paying off the debt. You will need to make a plan for your debt repayment and get counseling for money saving to pay your debts in a specific period of time.
File for Chapter 7
Chapter 7 bankruptcy for small business is for owners who cannot pay their debts. If your business is in an extremely poor state and you do not have enough money to pay off your debt, then you should file for Chapter 7. You have to prove with the help of documentations and income statements that you are not capable of paying the debt. In this case, you might be asked to sell your assets and pay some amount of the debt to the creditors. This is another type of bankruptcy that small business owners in Mississippi can file for, because in many cases, you will be allowed to have some money to continue to operate your business activities.