If your business is currently facing financial difficulties that it cannot handle on its own, it may be time to consult a corporate bankruptcy lawyer. While bankruptcy will have a significant impact on your business, it may be the only way to move forward.

Types of Business Bankruptcy

The three types of bankruptcy available to businesses include:

  • Chapter 7, often used by sole proprietorships and small businesses;
  • Chapter 13, which allows sole proprietorships to restructure their debt; and
  • Chapter 11, used by corporations and partnerships to help meet debt obligations.

When filing business bankruptcy in Dallas, you’ll first need to consult with a business bankruptcy attorney to see whether it’s truly the best option for you. If it is, it will then be important to determine which option best fits your situation.

Filing Chapter 7 Bankruptcy for Your Business

Chapter 7 bankruptcy is for businesses that don’t have the means to restructure their debt. It effectively frees you from most of your unsecured debts, though it may mean liquidating assets to do so. To qualify for Chapter 7, your business will need to pass a “Means Test” to see if its income is insufficient to meet its current obligations.

Chapter 7 bankruptcy is typically best for:

  • Sole proprietorships and general partnerships where individuals are responsible for business debts,
  • Corporations or LLC’s
  • Businesses that can no longer continue operating.

Filing Chapter 13 for Sole Proprietorships

Sole proprietorships that don’t pass the means test may qualify for Chapter 13 bankruptcy. Additionally, general partners of partnerships—not the partnership itself—may qualify to file under this chapter since they are personally liable for their business’s debts.

Chapter 13 allows individuals to pay off their debts over a three to five year period. To qualify, you’ll have to meet these requirements:

  • Be individually responsible for your debt ( if you’re a sole proprietor or general partner),
  • Wish to continue business operations, and
  • Have no more than $419,275 in unsecured debt and $1,257,850 in secured debts.*

Note that corporations, LLCs, LLPs, and other such organizations cannot file Chapter 13 bankruptcy.

*Debt limits are current as of April 2019.

Filing Chapter 11 for Partnerships and Corporations

Partnerships and corporations that wish to restructure their debts may file for Chapter 11 bankruptcy. The process of doing so is long and complex, and you will need a corporate bankruptcy lawyer to work with you through the process, including filing petitions and creating a repayment plan.

Get Started with a Business Bankruptcy Attorney

If you think you may need to file business bankruptcy in Dallas and other areas in North Texas, we can help you through that process. We’ll advise you on the steps you’ll need to take as well as which type of bankruptcy is right for your situation. To get started, contact the Law Offices of Bill F. Payne, P.C. today.