If you are in a commercial partnership, there may come a time where bankruptcy is the only solution. There are several types of commercial bankruptcies that you can file depending on your situation. This blog post will give an overview of the best option for your business.
When should you file for bankruptcy in a partnership?
You should file commercial bankruptcy when you can no longer meet your financial obligation because of a lack of revenue or assets to pay off debt. In this situation, filing commercial bankruptcy will release you from the debts owed by your business and you as an individual partner. This commercial option is often called “liquidation” for individuals who have been operating their commercial business for a long time.
Which type of commercial bankruptcy should you consider?
There are several different types of commercial bankruptcies that you can file depending on your situation. For commercial partnerships, Chapter 11 bankruptcy is a good option. In this situation, you will have a trustee to oversee your business as it restructures and pays off its debts. It may be a good option for commercial businesses that want to stay in operation while they pay back their debt or those who need time before selling assets or going through liquidation.
If your commercial partnership does not meet the requirements of Chapter 11 commercial filing and there is no other option, you can file commercial bankruptcy under Chapter 13.
In this commercial bankruptcy, you will pay back a percentage of your debt with monthly payments over the next three to five years.
How about chapter 7?
You may consider chapter 7 commercial bankruptcy if your commercial business has no assets. In this commercial filing, you’ll have a clean slate to start over with. However, chapter seven commercial bankruptcies can affect your credit score in a negative way for up to ten years after you file so it is important to consider other options before choosing it.