Tips On Getting Rid of Your Small Business’s Debt
Posted on Monday, November 10th, 2014 at 1:50 pm
Small businesses are the lifeblood of any community, and Kentucky’s staggering number of small businesses – over 70,000 – is no exception. Unfortunately, opening, operating, and succeeding in a small business is difficult. It is no secret that most small business (between 50% and 90%, depending on who you ask) fail in the first few years they are open. The failure of a small business can be devastating to a family, and the effects can linger for many years.
Is the Debt Yours or Part of the Corporation?
In the Northern Kentucky area, one of the most significant, lingering effects of a small business is the debt incurred to open the business. If you do not incorporate your small business, then any debt you take on belongs to you as well as the business. Even if you do incorporate your small business, many creditors will make you co-sign for your business in order to get a start up loan. In either event, closing the business does not eliminate the debt. The creditor simply turns to you, the business owner, with an expectation of full payment.
Should Your Small Business Stay Open or Shut Down?
Dealing with a business’s out of control debts initially comes down to one major decision: Should the business stay open, or is it time to shut it down? This is usually a decision for the business owner and perhaps an accountant or bookkeeper to make, since they know the business better than any outsider. If the small business will stay open, then a Chapter 11 bankruptcy is probably the best way to restructure the business’s debts while the business continues to operate. The Northern Kentucky Bankruptcy Attorney can help you with the process of filing a Chapter 11 bankruptcy.
If You Decide to Close the Business, Is Chapter 7 or Chapter 13 Bankruptcy the Best Option?
If it is time to close the small business, then the best way to deal with the debts may first be to take the value of the assets or equipment the business owns and determine if they can be sold for an amount sufficient to pay the debt. If not, then a consumer bankruptcy – either Chapter 7 or Chapter 13 – may be the best option for most Kenton County, Kentucky residents. If it looks like you will have to file a bankruptcy, it is very important that you speak to a Fort Mitchell Kentucky bankruptcy lawyer before disbursing any assets of the business. You might be surprised at what you can keep during a bankruptcy, and your attorney may be able to help you reduce secured debts significantly by negotiating asset transfers with secured creditors.
Delaying a Decision Is Usually a Small Business Owners Greatest Mistake
A bankruptcy of any kind, whether Chapter 7, 11, or 13, is generally a scary prospect for a small business owner. It almost always follows hard times, where money has been tight and stress has been high. However, delay is a small business owner’s greatest enemy whenever the business is failing and a change needs to be made.
Avoid the hassle of creditors and the confusion of following the bankruptcy laws on your own! A free consultation will decide which bankruptcy to file. We can also work together to stop foreclosures, repossessions, and lawsuits. Lawrence & Associates Bankruptcy office is located in Fort Mitchell, KY.
Contact Us (859.371.5997) for a Free Consultation