What is the Difference Between Chapter 11 Bankruptcy and Chapter 7 Liquidation for a Small Business?

Small business owners have options when filing for bankruptcy. Our West Palm Beach bankruptcy lawyer explains two of the most common types.

When you started your business, you did so with the highest of hopes and never imagined it taking on more debt than it could handle. Unfortunately, small businesses can struggle just like corporations or individuals. Filing for bankruptcy does not mean that your business venture has failed. In fact, many businesses go through the process only to come back stronger than ever before. The future of your business depends on the type of bankruptcy you file. Below, our West Palm Beach bankruptcy lawyer explains in further detail.

What to Know About Chapter 7 for Your Business

Chapter 7 bankruptcy is also known as liquidation because your small business’s assets are sold in order to try and repay some of your debt. Like all other matters of law, Chapter 7 has drawbacks as well as many benefits. When you file Chapter 7 for your company, you are agreeing to close your company and liquidate its assets.  Chapter 7 is rarely the best option for a business as it could expose the business’s owners to liability.

What to Know About Chapter 11 for Your Business

If you are not ready to close your business’s doors, you might consider Chapter 11.  Chapter 11 is an expensive and complicated process.  In Chapter 11, the business is seeking to reorganize its debt.  The business will propose a plan to pay its creditors based on the income or assets that it has.

Our Bankruptcy Lawyer in West Palm Beach Can Help You Determine the Right Process for You

If your business is struggling with debt, bankruptcy may be an option that can help. At Brian K. McMahon, P.A., our West Palm Beach bankruptcy lawyer can advise on the different types available and help you determine which one is right for you and your business. Call us now at (561) 658-1789 or contact us online to schedule a consultation with our experienced attorney and to learn more about how we can help.