Can You Continue Running Your Business if You File for Bankruptcy?
One of the most common questions we receive from small business owners about bankruptcy law is whether filing for bankruptcy will prevent them from being able to run their companies moving forward. Although bankruptcy can certainly pose some challenges to business owners, it can also be a process that allows a business to survive and ultimately thrive.
An attorney can provide you with personalized advice on this issue, but the following are some of the factors to consider when deciding whether you should continue doing business or shut down.
- Profitability of the business: Is the business making money? If it’s consistently losing money, your best option may be to close it down. However, if you own a profitable company that has temporarily fallen on hard times due to economic factors you think will improve, it might make sense to continue. The most important thing is to be realistic about the situation in which you find yourself.
- Balance of assets and liabilities: Ideally, your company’s assets should be worth more than its liabilities. If you’re already upside down, it’s probably better to shut down the business. However, if there’s the potential to reorganize your debt and come out stronger, it can be a practical route to solvency.
- Personal debt liability: Are you personally liable for any of the debts your business has incurred? This will depend in large part on the structure of your company. If you are liable, it might make more sense to keep the business running at least through your negotiations with creditors. Otherwise, those creditors will immediately go after your personal assets. Another option is to file for Chapter 7 bankruptcy protection to wipe out your personal liability.
Keep in mind that bankruptcy is not always your only option. There are some service providers that help debtors renegotiate the amount they owe or their payment terms. State law in Virginia also allows for what’s called an “assignment for the benefit of creditors” in which another person handles the disposition of proceeds and assets for the creditors.
For more information on your bankruptcy options as a business owner, consult a skilled Charlottesville bankruptcy lawyer with Miller Law Group, P.C. Please contact us online or give us a call at 434-218-3987.