You may consider filing for small business bankruptcy when your small business is in deep debt, and you need to resolve that debt. In Minnesota, there are several ways that you can do this, depending on a few factors. Read on to learn about your small business bankruptcy options in Saint Cloud, Minnesota.
Choose a Type of Bankruptcy
You can choose from three types of bankruptcy: Chapter 7, Chapter 11, and Chapter 13. Which one you select depends on your specific circumstances.
Chapter 7 bankruptcy can clear most of your debt immediately. However, you may have to immediately liquidate some of your assets to help cover the cost. This is the commonly used option for people who do not have a steady income and few assets of meaningful value.
Chapter 11 bankruptcy lets you continue to run your business but reorganize it into a more profitable entity. This is a good choice; if you can make your business profitable, you can offload the debts you already have.
Finally, Chapter 13 bankruptcy creates a plan to repay your debt over five years using the steady income that you have. If your business has a steady income, this method can let you pay a portion of the debt and discharge whatever cannot be paid in those five years.
Collect Information Before Filing For Bankruptcy
Before you can file for bankruptcy, you need to collect some information and discuss it with a lawyer first. You will need to make a list of:
- All of your personal and business debts
- Who you owe money to, and how much
- What your monthly and yearly income is
- An idea of how your business can be profitable if it doesn’t have debt
- A list of all of your personal and business assets that are not exempt under bankruptcy law
Your lawyer can help you collect this information, which is used to determine which type of bankruptcy is best for you. It is also used to create a repayment plan in Chapter 13 or liquidate assets in Chapter 7.
Work With a Lawyer to File for Bankruptcy
Have your lawyer review the case and file for bankruptcy on your behalf. The paperwork is complex and needs to be accurate. Otherwise, you can create problems for yourself. For example, any debt not declared in the filings cannot be discharged. Work with your lawyer to file the appropriate paperwork with the bankruptcy court as soon as possible. The sooner it is filed, the sooner you are protected from creditors.
Follow the Plan Exactly
Once the bankruptcy court approves your filings and plan, stick to the plan strictly. If you deviate, the court could revoke your bankruptcy proceedings. If you stick to the plan, you will be out of debt for at least five years.
Get Help With Bankruptcy Filings to Avoid Problems
When you file for bankruptcy, minor errors can lead to significant consequences. The best way to avoid problems when filing for bankruptcy is to get help from a qualified bankruptcy lawyer. They must review the specifics of your case to give you appropriate guidance. Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form to discuss your case during a free consultation.
