It’s a common fact of owning a small business: Small businesses fail all the time and for many various reasons, some of which are outside of the owner’s control. If you’re unable to pay the overhead, and are falling deeper and deeper into debt by keeping your company open, sometimes the best business decision you can make is to shut down the business and cut your losses.
When it comes to closing a debt-laden business, bankruptcy is one option that can allow you to stop bleeding money and get a fresh start. However, there are certain considerations for filing for certain types of bankruptcy, and filing a Chapter 7 business bankruptcy has its own benefits and drawbacks. As a sole proprietor, Chapter 7 lets you wipe out both personal and business debt in a single filing. There are some exceptions that apply and an experienced bankruptcy attorney can guide you in the right direction. And even though your personal assets will be included in the bankruptcy estate, you can use exemptions to protect some—and maybe even all—of your property. In a Chapter 7 business bankruptcy, the trustee is responsible for selling your assets and paying your creditors. A chapter 7 business bankruptcy may be the easiest way to go if you want to put the failing business behind you, and move forward with a new beginning.