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Making the decision to file for Chapter 7 is never easy. When the bankruptcy involves your small business, it can be an even more difficult decision to make. While filing bankruptcy doesn't necessarily mean you have to shut your business down, it does have some risks as well as some benefits that you may need to consider.
If you have run your business as a sole proprietor rather than a corporation, filing for Chapter 7 could potentially allow your creditors to go after you for any personal property that you may own. This means that the court could order your possessions to be sold to help pay off your debts.
Although it is possible to file for Chapter 7 for your small business without the help of a legal professional, you could potentially make costly mistakes trying to handle it all by yourself. Since there is a good chance that your small business is intertwined with your own personal finances, you may find that it is much easier to request the services of an attorney to help you sort the whole mess out.
Despite these drawbacks, you may find that getting out from your load of debt by filing Chapter 7 will allow you the opportunity to begin anew with a new business or venture. Filing bankruptcy often gives business owners a way to examine what went wrong with their old business strategy and can help them to not make the mistake again when they start something new.
Individuals who are considering filing a Chapter 7 bankruptcy may find it beneficial to learn more about the legal process and how it could pertain to their own personal case.
Source: FindLaw, "Should Your Business File for Bankruptcy?," Brett Snider, June 11, 2015