Filing for bankruptcy is something no business owner ever wants to do. It’s time-consuming, stressful, and can derail your business’s future. During bankruptcy, your creditors will do everything they can to get the money you owe them. This includes going after your business’s assets whenever possible. While you may not be able to protect all of your company’s assets from bankruptcy, there are a few things you can do to mitigate the risk of losing them all. Your Wisconsin business bankruptcy attorney can help you from the get-go, but here are a few tips you’ll want to keep in mind before you file.
Choose the Right Type of Bankruptcy
There’s more than one type of bankruptcy that business owners who are struggling to repay their debts can file in Wisconsin, and each offers a few distinct benefits. While Chapter 7 bankruptcy lets you discharge most if not all of your business’s debts, it does so by sacrificing your business’s assets. Here are three alternatives that can help you protect your assets and potentially keep your business running even after you file.
Chapter 11
Chapter 11 bankruptcy is a reorganization of your business designed to keep your company running even after bankruptcy. It lets you restructure your business in a way that helps you save money while also proposing a debt repayment plan with your creditors. The goal of this bankruptcy is to keep your company running in a way that promotes financial strength and recovery over time.
Since you’re not trying to discharge your debts and are instead trying to repay your creditors, you’re able to keep much of your business’s assets. Keep in mind that the court may decide that certain pieces of property should be sold off to repay what you owe.
Chapter 13
Chapter 13 bankruptcy lets you reorganize your debts into a three-to-five-year repayment plan. You’ll have to make regular payments to your creditors but should be able to keep your business running and preserve most if not all of your company’s assets.
Your Wisconsin business bankruptcy attorney can help you decide if Chapter 13 is the right method for your situation.
Chapter 128
Chapter 128 is an alternative to bankruptcy that lets you negotiate a 36-month-long repayment plan with your creditors. This bankruptcy alternative is unique to Wisconsin and can help you keep your business solvent and growing while you reduce your total debts without forcing you to sell assets to settle those debts.
Use the Right Type of Business Entity
The way you form your business can influence how many of your business’s assets can be sold to settle your debt if you file for bankruptcy. If you’re worried about the way your company is performing, you may want to consider restructuring your business to provide better protection for your business and your personal assets.
For example, sole proprietors are unable to protect their personal and business assets if they file for bankruptcy. But by restructuring their company into a limited liability company (LLC), they’ll be able to protect their personal assets if the company files for bankruptcy and their business assets if they file for personal bankruptcy.
Your best option is to speak with an experienced business formation attorney. They’ll help you better understand your options and can help you navigate the process of restructuring your company.
Speak With a Wisconsin Business Bankruptcy Attorney
Protecting your business’s assets when filing for bankruptcy can help you keep your company afloat and your employees working. But doing so isn’t always simple. If you’re worried about your company’s financial future and are considering bankruptcy, speak with a Wisconsin business bankruptcy attorney as soon as possible.
At Kerkman & Dunn, our team is here to help. Contact us today to schedule a consultation and learn more about your options.
