OK, your business is in tourble and you’re finally facing up to the realities of the situation. As an Indiana bankruptcy attorney, I know how difficult a juncture this is for any business owner. Having guided many a small business through the process, beginning with deciding whether to file, then under which chapter of bankruptcy to file, then carry through with all the details, I’ve been there with my clients every step of the way.
Three main questions to ask yourself at the start:
1. Do I want to close the business or continue operating?
2. Is there an immediate and specific problem (such as foreclosure, eviction, repossession, or utilities being shut off)?
3. If I want to continue operating the business, what plan do I have to become profitable again?
Three factors to consider:
a. Chapter 11 bankruptcy (which allows a business to continue operating) is more expensive than Chapter 7.
b. If you or any other people have personally guaranteed any of the debts of the business, filing bankruptcy will not stop creditors’ claims against guarantors.
c. There are restrictions on the operations of a business under bankruptcy, so you won’t be quite as free as before to make business decisions.
Answering the three questions, then mulling over the three factors, can help prepare you to make the difficult but important decisions affecting the future of your small business. I always tell people to meet with an experienced bankruptcy attorney before taking such an important step.