By Al Krulick
Your business venture failed and you decided to declare bankruptcy. Debt consolidation didn’t work out and neither did your attempt to satisfy your credit obligations with a debt settlement plan.
You may be feeling lonely and defeated, but you are certainly not alone. In fact, according to the most recent statistics from the U.S. Census Bureau, more than 170,000 American small businesses closed their doors between 2008 and 2010.
Want some more numbers? The Census Bureau also reports that 80 percent of all businesses don’t survive past their first year. And according to the U.S Bureau of Labor Statistics, six in ten businesses shut down within their first four years. The Small Business Administration says that 50 percent of all small businesses fail within their first five years.
The numbers don’t all quite add up but, more importantly, you now know that you are far from alone in your frustrations. This, however, still doesn’t help you figure out what you’re going to do next.
You’ve got two basic choices: You can hang your head and crawl back to some too-small corporate cubicle or you can determine to put the pieces back together and move ahead.
Assuming you choose the latter, here are some possibilities worth considering:
Each of the three types of bankruptcies – Chapter 7, 11, and 13 – offer options to keep your business alive, if that’s what you want to do. Chapter 7 can help you if you’re a sole proprietor. It wipes out both personal and business debts and helps protect certain business assets.
A chapter 13 bankruptcy is also for sole proprietors and is designed to allow you to keep all your business assets, reorganize your debts via a repayment plan and keep operating. Chapter 11 is for partnerships, corporations and LLCs.
If you want to shut the business down, liquidation via Chapter 7 allows you to sell your assets and distribute the proceeds among your creditors.
Before making a decision on how to file, think hard about what you want to do post-bankruptcy. Then talk to a knowledgeable bankruptcy attorney to determine your best options and how you’re going to get where you want to go.
After the bankruptcy is finalized, you will have to begin rebuilding your credit, and the bankruptcy will remain on your credit report for seven years.
Al Krulick is an award-winning journalist with dozens of years of writing experience. He writes and blogs for Debt.org. Join the conversation on our Debt.org Facebook page.