Any business venture comes with some risk. Most businesses don’t become profitable for at least two years. Unfortunately, about 20% of new businesses fail within two years; 45% fail within five years; and 65% fail within ten years of opening. There are many reasons why businesses fail, from low financing to overly rapid expansion, but the majority of business failure happens because of a complex combination of factors. If you’re facing business debt you know you cannot repay, it may be time to consider taking more direct actions to resolve those financial issues. Bankruptcy can greatly aid your financial recovery. You need to know what the risks of bankruptcy are.
Risks of Bankruptcy
Bankruptcy is one way many businesses recover from overbearing debt, either in a reorganization bankruptcy that allows the business operations to continue, or with a liquidation case that cuts their losses and closes the company. If you own your business as a sole proprietor or a partnership, Chapter 13 bankruptcy could be the best choice for restructuring your company and personal debts into a repayment plan. If your business is a limited liability or a corporation, and you are ready to liquidate and shut down operations, Chapter 7 bankruptcy might be the best answer. Behm Law Group Ltd. can help individuals and small businesses filing for Chapter 13 or 7. Our attorneys provide legal protection and guidance throughout your case, including giving important information about the benefits and risks of bankruptcy in Waseca, MN, and the surrounding area.
In the Risks of Bankruptcy Usually Benefits Outweigh Risks
In most situations, the benefits far outweigh the risks of bankruptcy if you’re in the right circumstances to file an individual or business case. However, the structure of your business determines who is responsible for the business debt included in your case. In some instances, you and your spouse may both be personally liable for business debts.
First, you are always responsible for your business debt if your company is a sole proprietorship or if you are a general partner in a business. If this is the case, your personal and business debts would be included together in your bankruptcy.
Business Debts is
If you and your spouse own a business together and the business is structured as a partnership, both the individual debts for you and your spouse and the business partnership debts would need to be included in a Chapter 7 or Chapter 13 bankruptcy case. Another example where you and your spouse would be personally liable for business debts in a bankruptcy case is if your business is a corporation and you and your spouse signed personal guarantees with the creditors. In this case, even if your business is organized as a limited liability company or a corporation, you and your spouse would be personally liable for any business debts.
Summary
For more information about why the benefits often overrule the risks of bankruptcy in Waseca, MN, and the local region, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com.
