Whether your business is large or small, it can be disconcerting for a business owner to file bankruptcy. One of the most frequent questions that many business owners have is what they should expect when they have a business in bankruptcy. They often wonder how the bankruptcy filing will affect their day to day operations and their ability to make decisions regarding their business.

The answer to this question often lies in exactly which type of bankruptcy was filed. Businesses owners are typically able to file one of three types of bankruptcy depending on their situation and the amount of money that is owned. Under Chapter 11 the business has the opportunity to restructure and reorganize, giving them an opportunity for a fresh new start. That is not the case with all forms of bankruptcy.

One element that a business owner should be aware of and expect while they have a business in bankruptcy is that an automatic stay will be initiated once the petition for bankruptcy has been filed. The purpose of the stay is to prevent creditors from taking any further collection attempts regarding debts that are owed by the business. This can be a tremendous relief for most business owners who have likely been besieged by collection phone calls and letters. The stay alone can help to bring about a tremendous sense of calm.

While that can be an advantage to having a business in bankruptcy, there are also other elements which can affect the day to day decisions which may not be so pleasant. For example, if assets are to be liquidated then a trustee will be appointed by the judge to handle the liquidation of those assets. This can be disturbing for a business owner who has spent so much time and energy building a business, only to be forced to watch someone else sell their assets. Yet, this is an important part of having a business in bankruptcy in many situations and it is one for which you should be prepared if you are thinking of filing for bankruptcy.

The exact length of time that it takes to complete the process of having a business in bankruptcy will vary. It is strictly on a case by case basis because everyone’s situation is unique. In some cases, a business in bankruptcy may be concluded in just a few months. In other situations it could take three to five years to conclude all of the steps related to the bankruptcy.

The process of filing for business bankruptcy can be complex and it can be time consuming. The best option is to consult an attorney as soon as you think that your business may be in trouble and inquire about business bankruptcy as well as any alternatives that may be available for your particular situation. While business bankruptcy is not a pleasant option, if it is your only option, remember that you can recover with the right experience and skilled consultation.

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