Many small businesses were hit hard when Coronavirus took center stage in 2020. Those who could not survive had no choice but to file for bankruptcy. Many are still contacting bankruptcy attorneys for help navigating what to do for their companies.
According to Harvard Economic Tracker, in the United States, in 2020 alone, approximately one-third of businesses shut down either for the short term or the long term. This is despite the fact that Washington had many forgivable loans made available. While many smaller companies walked away wholly, others used the assistance of a bankruptcy attorney to file for bankruptcy.
When you file for bankruptcy for your small business, your hired bankruptcy attorney will ask questions determining what sort of bankruptcy should be filed. These questions include who is obligated to pay the debt, the company’s structure, if you would like to remain open or not, and if so, what your action plan is.
As with many things in life, there is never a one size fits all plan. However, as there are many types of solutions to bankruptcy, you will have a variety of ways to deal with your circumstances.
One good tidbit about bankruptcy took place in February when lawmakers placed the Small Business Restructuring Act into place. By determining the correct way to file for bankruptcy, you are able to put your personal possession, so they are not at risk.
You may file for bankruptcy in one of the following ways for your small business:
- Chapter 7 Bankruptcy for a sole proprietorship
- Chapter 13 Bankruptcy for a sole proprietorship
You could also file as a partnership. In this case, you would need to determine if you want to file as:
- General partnerships (GP) are alliances in a straightforward fashion. If GP registers for Chapter 7 insolvency, the partners are individually obliged for all the union’s liabilities.
- Limited Partnerships (LP) occur with both GPs and limited partners. Moreover, GPs are individually accountable to lenders. LPs are responsible merely for the arrears; if any, they are privately ensured.
- Limited Liability Partnerships (LLP) could contain restricted obligations. LLPs may stay accountable for any liabilities privately assured.
A final option is for you to file as a Limited Liability Company (LLC). Under an LLC, your business is separated between the company’s existence and those concerned with its activities. An LLC that registers for Chapter 7 bankruptcy has the outcome of the enterprise’s resources being purged to settle any liabilities.
If you reside in the Tampa Bay area and are in need of a bankruptcy attorney, or have questions about how to file for bankruptcy, contact Weller Legal Group.They can assist you in figuring out the most suitable course of action for your small business.