Why do some businesses choose to declare bankruptcy instead of working out a repayment plan?
Jan Meriss Alfonso Assistant at Ascent Law LLC Why Businesses Choose Bankruptcy Instead of a Repayment Plan If a business is facing financial problems, it may consider filing for bankruptcy. There are three types of bankruptcy that businesses can file for. They are Chapter 7 bankruptcy, Chapter 11 bankruptcy, and Chapter 12 bankruptcy. In some cases, a business can be forced into bankruptcy by a creditor. If this happens, creditors will face stiff financial penalties. Chapter 13 bankruptcy If you are wondering whether Chapter 13 bankruptcy is better for your business than a repayment plan, there are a few important differences between the two. For starters, a repayment plan is more flexible. A Chapter 13 repayment plan will allow you to lower your monthly payments and reduce your total debt to the value of your property. In addition, you will no longer be personally liable for your business debts. The duration of the repayment plan varies from three to five years, depending on yo...