Many small business owners struggle to make ends meet. While building a business from the ground up can be a highly rewarding experience, it can also be risky. In business, there are never any guarantees. If you are a business owner and you are dealing with difficult financial times, you should discuss your options with a New Jersey small business bankruptcy attorney.
Small business owners in New Jersey have a variety of options when it comes to filing for bankruptcy. Along with the traditional options under Chapters 7, 11 and 13 of the U.S. Bankruptcy Code, small business owners have access to some special opportunities as well. These special opportunities can significantly reduce the time and cost involved in getting a fresh start, and they will prove to be the best options for many entrepreneurs.
The special bankruptcy options for small business owners exist under Chapter 11 of the U.S. Bankruptcy Code. While small business owners can pursue traditional Chapter 11 bankruptcies when warranted, they may also be able to pursue either (i) a streamlined bankruptcy under the Small Business Reorganization Act (SBRA) or (ii) a “small business case” under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA).
As explained by the U.S. Courts:
“A [small business] debtor may elect either of these two options based on certain eligibility criteria. Both [BAPCPA] and [SBRA] cases are treated differently than a traditional chapter 11 case primarily due to accelerated deadlines and the speed with which the plan is confirmed. The two types of cases have different debt limits, defined as the total amount of noncontingent liquidated secured and unsecured debt at the time the debtor files their bankruptcy case.”
For many small business owners, the costs of pursuing a traditional Chapter 11 bankruptcy can be prohibitive. This is precisely why Congress enacted the SBRA and BAPCPA. A New Jersey small business bankruptcy attorney can help you determine if you qualify to pursue either (or both) of these options; and, if you do, your attorney can help you choose the best path forward.
In many cases, pursuing a small business bankruptcy under the SBRA (also referred to as a Subchapter V bankruptcy) will be the best option. While the SBRA has more stringent qualification requirements than the BAPCPA, most entrepreneur-owned small businesses will qualify under Subchapter V. Some of the benefits of pursuing a Subchapter V bankruptcy as a small business owner in New Jersey include:
Regardless of which option you ultimately choose, pursuing a small business bankruptcy under Chapter 11 can afford several forms of financial relief. For example, whether you hire a New Jersey small business bankruptcy attorney to guide you through a small business case or a Subchapter V bankruptcy, successfully navigating the process will provide relief including:
While SBRA and BAPCPA bankruptcies are good options for many small business owners, entrepreneurs should not consider these options exclusively. When seeking bankruptcy protection, it is important to work with an experienced New Jersey small business bankruptcy attorney who can help you carefully evaluate all of the options you have available. Depending on your small business’s financial circumstances (and your own personal financial circumstances), your options may also include:
If you are prepared to close your small business, then you may want to consider filing for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code. Filing under Chapter 7 allows you to eliminate the maximum amount of your small business’s debts. But, it also involves liquidating your small business’s non-exempt assets; and, as a result, this generally means shutting down your business and moving on.
Small business owners also have the option of pursuing a traditional business bankruptcy under Chapter 11, without utilizing the provisions of the SBRA or BAPCPA. As noted above, this option will prove cost-prohibitive for small business owners in many cases. But, when it isn’t there can be benefits to pursuing a bankruptcy outside of the confines of a small business case or Subchapter V.
Filing for bankruptcy under Chapter 13 is another viable option for many small business owners in New Jersey. Filing under Chapter 13 is similar to filing under Chapter 11 in that it allows you to reorganize your small business’s debts and continue operating post-bankruptcy. If you still have plans to grow your business and just need some financial breathing room in order to do so, then a Chapter 13 filing is definitely an option to discuss with your New Jersey small business bankruptcy attorney.
In some circumstances, it will make sense for small business owners to consider alternatives to bankruptcy as well. If you can work with a New Jersey small business bankruptcy attorney to eliminate or restructure your business’s debts outside of the formal bankruptcy process, this could provide the financial relief you need without the burdens that come with a Chapter 7, 11 or 13 bankruptcy.
As a small business owner, when is it time to consider bankruptcy? Filing for bankruptcy may be a good option for securing financial relief if:
For many small business owners, their financial problems start small. They find short-term solutions, and they assume that they will be able to turn things around. Unfortunately, this isn’t always the case. Small businesses struggle for a variety of different reasons; and, if your small business is struggling, it is important to take action before it is too late. While filing for bankruptcy (or pursuing a suitable bankruptcy alternative) can be an effective solution, waiting to file can limit the benefits that are available to you. There is no harm in learning about your options, and you owe it to yourself, your family, your customers and your employees to ensure that you are making smart decisions.
If you would like to know more about the options you have available, we invite you to get in touch. To request a free consultation with New Jersey small business bankruptcy attorney Georgette Miller, please call 866-964-6529 or tell us how we can help online today.