Despite your best efforts, your business may fall on hard times. Fortunately, bankruptcy laws are there to help you and your company get back on your feet. No business owner wants to file for bankruptcy, but things happen. If you’re considering filing for bankruptcy as a business, be sure to hire a skilled Tampa bankruptcy lawyer. You should also consider the long-term effects of filing before doing so. Businesses can file for bankruptcy under Chapters 7, 11, 12 or 13 of the bankruptcy code, and the long-term impact of filing varies depending on the one you choose.
Elimination of Debt
The primary reason to file for business bankruptcy is to eliminate debt that you can’t repay. Again, the type of bankruptcy that’s used affects how much debt can be eliminated, if any can be at all. If your company is owned solely by you or by you and a partner, Chapter 7 bankruptcy may allow you to cancel all business debts, court judgments, leases and medical bills. Corporations can file for bankruptcy, but they must opt for Chapter 11 or 13. Both options require the repayment of at least some of the debt over time.
The Future of Your Business
Bankruptcy doesn’t necessarily mean the end for your business. One of three outcomes generally occurs: liquidation, reorganization or repayment. Under Chapter 11, for instance, you can keep running your business while it’s reorganized in order to repay at least some of the debt. Under Chapter 13, your business will need to pay off at least some of the debt over a period of three to five years, but it can continue operating in the meantime. With Chapter 7, which eliminates all debt, your business must close, and virtually all of the property associated with it must be sold.
Effect on Credit
It’s natural to be concerned about how a business bankruptcy will affect your credit. As long as the business is incorporated, it legally has an identity that’s separate from yours. Therefore, the only way a bankruptcy will impact your credit is if you have taken out business loans or opened credit cards in your name and accumulated debt related to your business on those accounts. You aren’t necessarily in the clear if all of your debt is in the name of your corporation, though, because vendors who weren’t repaid in full may choose not to extend you credit in the future.
It should also be noted that even if you file for bankruptcy in your own name, there are limits as to how long such actions will affect your credit score. A Chapter 7 bankruptcy will stay on your file for 10 years, and a Chapter 11 bankruptcy will remain for seven years.
Hire an Experienced Tampa Bankruptcy Lawyer
Don’t put the future of your business on the line. Regardless of the type of bankruptcy you choose, it’s crucial to take a methodical approach. Call Tampa bankruptcy lawyer Robert Savage at 813-200-0013 now.