If it appears that you cannot pay your current creditors while your business is still in the startup phase, it may be necessary to file for bankruptcy protection. The type of protection you should seek depends heavily on the quantity of debt you owe and the company's future prospects. Here are a few options to consider.
Your first option is to petition for Chapter 11 bankruptcy protection. With this form of bankruptcy, you would adhere to a court-approved repayment plan to pay off the company's current debts. This is the optimal strategy if you have solid reasons to believe that the company will be able to develop a steady clientele and become profitable. Keep in mind that in a Chapter 11 bankruptcy, it is always possible to pay off the balance due in advance if your company's performance exceeds projections.(Consider GM)
Chapter 7 bankruptcy protection is a second option. This is the ideal course of action if you believe that your company will not find a market and has little chance of becoming profitable. Under these conditions, the objective is to settle the debts and be able to close down the company.
Each alternative contains financial variables. If you are contemplating your options because you are researching small business bankruptcy, you should act immediately. Your next step will be to consult a bankruptcy attorney. The majority of initial consultations with bankruptcy attorneys are free. Be proactive in your commercial dealings. Don't allow it to spiral out of control. There are solutions, but it is time to consult with an attorney.""
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