Filing for a business bankruptcy is certainly never easy. It can be emotionally draining to realize that you are going to need to do so. In such difficult times it can be trying to understand what must be done in order to file for a business bankruptcy. A skilled and experienced business bankruptcy attorney can help to guide you through the process, but it can also be comforting to understand as much of what will be involved as possible.

The first course of action when filing a business bankruptcy is to determine which type of bankruptcy will need to be filed. Under most circumstances a business can file for one of three different forms of bankruptcy. These forms of bankruptcy are Chapter 7, Chapter 11 and Chapter 13.

The purpose of Chapter 7 is to liquidate the assets of the debtor. This includes the business. The goal of Chapter 11 is to allow a business that is struggling to reorganize. Chapter 13 bankruptcy is typically only for individuals; however, that individual may have business debts. Your bankruptcy attorney will be able to help guide you and make recommendations regarding which form of bankruptcy is best for your situation.

When filing a business bankruptcy you will also need to attend credit counseling. This became a requirement as of a law passed in 2005. You will be required to attend credit counseling classes in the months before you actually file a business bankruptcy. It is best to go ahead and get this requirement out of the way.

The next step in the process is to begin bankruptcy proceedings. After you have filed a bankruptcy for your business an automatic stay will be initiated which will prohibit creditors from taking any further action regarding the collection of the debts that you owe.

After the bankruptcy has been filed, you will need to take steps to reorganize your debts if you have filed for a Chapter 11 bankruptcy. This means that you must devise a plan for how your debts will be paid off. This could include a variety of different steps for businesses including laying off staff, closing offices, voiding supplier contractors or establishing a repayment plan for creditors.

In the event that you file for Chapter 7, then the next step will be to begin liquidating or selling your assets. You can certainly initiate this process on your own, but you should be aware that once you have filed a business bankruptcy that the court will appoint someone who will manage the remaining liquidation of your assets.

The final step in the process of filing a business bankruptcy is to begin to rebuild. Although bankruptcy is a serious matter and it will remain on your credit record for ten years, you will be able to go on and rebuild with a fresh new start. As you move forward, make sure that you stay current on your taxes. This is not something that filing a business bankruptcy will excuse you from and in the end it will save you additional headaches from the IRS.

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