Bankruptcy for Small Businesses
If your small business is inundated with debt, you can file for Chapter 7, Chapter 13, or Chapter 11 bankruptcy. Before you decide on what type of bankruptcy to file, you need to determine if you should file a personal bankruptcy or a business bankruptcy.
If you are personally liable for your business's debts, you should probably file a personal bankruptcy. You are personally liable for business debt if your business is structured as a sole proprietorship or general partnership. Most small business owners that file for personal bankruptcy choose Chapter 7 or Chapter 13, although sometimes Chapter 11 is a good option too.
If your business is structured as a corporation or LLC, the business is responsible for paying business debts, not you (although there are some exceptions which are covered in the articles below). If you want to file for bankruptcy, you'll have to do so on behalf of the business (this is often called a business bankruptcy). You can do so under Chapter 7 or Chapter 11 -- Chapter 13 is not available to business entities.
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The Differences Between Personal and Corporate Bankruptcy
Personal bankruptcy and business bankruptcy are not the same things and have different rules and chapters. -
Small Business Owners: Chapter 13 v Chapter 7 Bankruptcy
Start here to learn if Chapter 7 or Chapter 13 is better for your business. -
Bankruptcy: Sole Proprietorship vs. Partnership
Bankruptcy laws apply differently depending on whether a business is a sole proprietorship or a partnership. Learn more. -
How Does a Sole Proprietorship File for Bankruptcy?
If your business is a sole proprietorship, you must file for personal bankruptcy to rid yourself of business debt. Here are your options. -
What Not to Do If You Are Considering Business Bankruptcy
If you’ve concluded that Chapter 7 bankruptcy may be in the cards for your small business, there are certain actions you should avoid taking. Otherwise you could harm your bankruptcy case. -
Will You Have to Close Your Business if You File for Personal Bankruptcy?
If you file personal Chapter 7 bankruptcy, the bankruptcy trustee may be able to close your business. Learn more.
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Are You Personally Liable for Business Debts?
Find out if creditors can come after your personal assets if you default on business debt. If they can, you'll have to file a personal bankruptcy (rather than a business bankruptcy).
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Chapter 7 Bankruptcy for Small Businesses
Find out if Chapter 7 bankruptcy is a good option for your small business.
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Chapter 13 Bankruptcy for Small Business Owners
Learn how Chapter 13 works for your small business debt. -
Chapter 11 v. Chapter 13 for Small Businesses
Learn about the pros and cons of Chapter 11 and Chapter 13 bankruptcy for small businesses.
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Chapter 11 Bankruptcy for Small Businesses
Learn when Chapter 11 bankruptcy might be a good option for your small business. -
When Is Chapter 11 Bankruptcy a Good Option for a Small Business?
Sometimes Chapter 11 bankruptcy is a good option for small businesses struggling with debt. Learn when it can help.
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Small Business Bankruptcy: Part 1
Part one of a two part series on Bankruptcy for Small Business Owners -
Small Business Bankruptcy: Part 2
Part two of a two part series on Bankruptcy for Small Business Owners
This Section Edited and Managed by: Kathleen Michon, J.D. Kathleen is the lead editor and manages the information provided on this site.