Taking on debt is a necessity for most businesses. In fact, it is often quite difficult to expand and grow without obtaining financing. The financing could take many forms, including secured debt as well as unsecured debt. The problem for most businesses occurs when they experience a financial setback that makes it difficult for them to pay back their loans. A common example would be losing a major contract or client. Problems could also occur when the business takes on too much debt too fast. Regardless of the exact cause, when a business is not able to pay back their unsecured debt they can face numerous problems. One of those problems is often harassment by creditors. This can include numerous phone calls and threatening mail. Such harassment combined with the knowledge that they are not able to pay their debts can be quite stressful for business owners. The solution in such situations is a business debt bankruptcy filing.

Filing for bankruptcy can result in a number of different outcomes, depending upon the type of business debt bankruptcy petition that the business owner chooses to file. One of the most well known forms of bankruptcy for business is Chapter 7. This form of bankruptcy involves complete liquidation of the business. If there are any nonexempt assets they will be sold in order to pay back as much of the debt that is owed as possible. In some cases there may not be any nonexempt assets available to sell. In this case, the debts will be discharged. As a result of changes in business debt bankruptcy laws, the ability to file for this type of bankruptcy has been severely restricted.

The only way that a business can possibly survive filing for business debt bankruptcy is to file for business debt bankruptcy using a petition that allows for repayment. The exact type of bankruptcy that a business will file for will depend upon the situation. Most business who do not qualify for Chapter 7 and/or who choose to repay their debts will file under Chapter 11, but there are also other options that are available as well. For example, in some circumstances, Chapter 12 might be a better option. This form of business debt bankruptcy is used by family farmers and fishermen. It is designed with specific guidelines that benefit those industries and situations.

Under a repayment plan, the goal is to keep the business in operation while paying back funds to creditors of unsecured debts. The amount of time that it takes for this to be completed will vary, depending on the situation, but usually varies between three and five years. If the business owner pays back funds on time per the requirements of the repayment plan and continues to earn a profit there is a very good possibility that the company will be able to remain in business. For many business owners, this provides the best opportunity possible for the business to survive while also meeting financial obligations.

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