Small business owners in Louisiana who are experiencing hard times and considering their options may find themselves in stressful situations. Their personal finances and the finances of their businesses may be intimately entangled, and they may question the consequences of bankruptcy. They may be desperate to keep the doors of their businesses open, while at the same time trying to maintain the financial stability of their families.
When sole proprietors file for bankruptcy, their creditors may target their personal assets. Filing for Chapter 13 or Chapter 7 bankruptcy will be similar to filing in a personal capacity. However, although Chapter 11 is an expensive option, such a filing can hold off the creditors for a while until the owner can prove to the bankruptcy court that the business could be profitable.
It will be the business owner’s decision whether to close the business’s doors or continue operating. If the choice is to end the business, Chapter 7 bankruptcy might be the best option because although some assets will be liquidated, unsecured debts will be discharged, affording the owner a fresh start. Chapter 13 will provide the opportunity to pay debts over an extended period while continuing business operations.
Although it is true that it will be tough to get credit or loans after a bankruptcy filing, the new start may bring new investors. The timing of such a filing is crucial because trying for too long to just keep head above water may exacerbate the situation. A positive step may be to consult with an experienced Louisiana bankruptcy attorney to obtain all the relative information. Only then can a small business owner make informed choices.
Source: FindLaw, “Should Your Business File for Bankruptcy?“, Brett Snider, Accessed on Nov. 18, 2016