As a Wisconsin small business owner, you likely could not have felt more proud than the day you opened the doors of your operation. You may have felt excited to get your company running and to provide your customers or clients with the product or service you crafted. For a time, you may have felt your business was on the rise.
Of course, as you likely knew before starting your company, many small businesses do not last, and unfortunately, your business has suffered considerable financial losses that have led to substantial debt. Now, you wonder whether you will have the ability to keep your business running and how you will be able to address your outstanding liabilities.
Options for a sole proprietorship
Because you chose to utilize a sole proprietorship for your business entity, you may have bankruptcy options that could help your business similar to those used for consumer bankruptcy. While Chapter 11 commonly enters the conversation for business bankruptcy, Chapter 7 or Chapter 13 may better suit your business needs as a sole proprietorship.
Chapter 7
If your business finances have gone considerably downhill and your product or service is no longer continuing to thrive, you may feel that you will have to shut the doors on your business. If so, filing for Chapter 7 bankruptcy may work as the best option for your case. Like in consumer cases, Chapter 7 will involve the liquidation of assets — in this case, business assets — in order to repay creditors. In the end, the remaining allowable debts associated with your sole proprietorship may be discharged.
At the end of a successful Chapter 7 case, your will no longer have the obligation of addressing those forgiven business debts, but you will also likely not have the ability to continue running your business.
Chapter 13
If you believe that your company may still have a chance to keep its doors open, you may want to consider Chapter 13 bankruptcy for your sole proprietorship. This option would involve creating a repayment plan to repay your business creditors. The bankruptcy court would have to approve your plan in order for you to move forward with it.
In order to find the right option for your circumstances, you may want to fully assess your situation. You may also find it useful to gain a professional evaluation from a bankruptcy attorney who could help you determine the right path and guide you through whichever process works best for your business.
