If you’re a sole proprietor of your own small business, you are personally liable for all debts if your business starts to struggle. Therefore, it’s important that you take action before your business starts to get into a high amount of debt.

If your business has failed to generate enough income over the last few months and you have seen your debts rise to high levels, you should make sure that you have a strategy in place. Filing for bankruptcy is not necessarily the answer for everyone, but if you are looking for a way to quickly wipe away your debts and you do not currently have a high income, Chapter 7 bankruptcy could be a good option for you. The following is an overview of how you can benefit from Chapter 7 bankruptcy as a small business owner.

What is Chapter 7 bankruptcy?

Chapter 7 bankruptcy uses the liquidation of assets to pay off debts. This means that it is probably not suitable for high-asset individuals, because homeowners will likely need to sell their property for liquidation purposes. However, if you do not own many assets, you’ll be able to liquidate what you do have, with exemptions for certain property, and you’ll likely benefit from a discharge of all remaining debts after the process is over.

Why is Chapter 7 bankruptcy beneficial for small business owners?

As a sole proprietor, your debts and assets will be yours personally. If your business has failed to generate an income for the last few months, you’ll need to come up with a quick solution. By filing for Chapter 7 bankruptcy, you could use assets such as stock to liquidate and pay off your debts. The Chapter 7 bankruptcy process can be completed in a matter of months and will almost certainly leave you debt-free.

If your business has failed and you want a fresh start, filing for Chapter 7 bankruptcy could be a great opportunity to get back on track.