Debt Relief Options

  • Debt Relief

What are the Debt Relief Options for Small Businesses and their Owners?

Starting a business in uncertain times can go anywhere. Whether you reach the zeniths of success or taste failure, it is a matter of chance. The odds are stacked against you no matter which business you wish to start. A lot of financial capital, overhead expenses, and advertising are involved to make any business a successful venture. However, sometimes, business owners might find themselves struggling with these expenses, trying to stay afloat or make a profit. In case small business owners or start-ups are facing problems in managing their finances (personal or business) they might find themselves under heavy debt. This is more often seen when the business is a sole propriety one, wherein the personal finances and assets are tied up with business ones. For such situations, Sacramento based law firm Recovery Law Group provides an insight into the debt relief options for small businesses and business owners.

Since a lot of emphases is being given to people who wish to become independent by turning entrepreneurs, the legal system also supports them during the time of financial crisis. Business owners facing economic issues at work and under financial stress have a number of viable options to take care of financial matters. A consultation with lawyers specializing in bankruptcy can help clear the problems. It is important to seek legal assistance to sort out the financial mess so that you can improve the position of your business and continue operating it, while simultaneously improving on your personal finances.

What are the Debt Relief options Available for Businesses?

Just like every individual’s circumstances are different, so do the problems in businesses. Your debt relief options will depend on your unique situation. Factors influencing debt relief include – a type of business, the aim of business owners and the nature of the financial problem. The different ways in which business owners can utilize bankruptcy is elaborated below:

Chapter 7 Bankruptcy – Small businesses especially those with single proprietorships may use this chapter of bankruptcy. The unique circumstances which prompt the usage of this chapter are when the business has no future and the owner wishes to liquidate it, without any plans of restructuring. This is usually chosen when the businesses have overwhelming debts, the business is being operated due to an extension of a particular skill set and the owner has very few or limited assets.

Chapter 11 Bankruptcy – This option is generally chosen when business owners wish to remain in business. This chapter allows reorganization and thus creates plans for paying the creditors’ off, over a fixed time period. A drawback to choosing this chapter is that it is a complicated and lengthy process which may not always be ideal for small business owners.

Chapter 13 Bankruptcy – The reorganization bankruptcy is generally used as a form of personal bankruptcy. This is generally ideal for small businesses, especially when companies wish to pay back a percentage of their debt. The repayment plan suggested by the bankruptcy court is followed by business owners who have invested personal funds in their business venture. This chapter of bankruptcy can, however, not be used by corporations and businesses which do not have sole proprietorships.

If you wish to get over the financial troubles that your business is currently facing, it is important to make a consultation with specialized bankruptcy lawyers. The legal minds can help guide you through the financial problems and suggest the best legal recourse available for you.