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Will I have to close my business if I file for bankruptcy?

When your small Florida business falls on hard times, you can struggle to pay off all your debts. Between vendors, suppliers, your employees and the IRS, you can end up with multiple unpaid bills that affect your business. When you reach this state, you may consider filing for Chapter 11 bankruptcy.

With a Chapter 11 bankruptcy, you can create a plan that puts you back on track. If you go through a Chapter 11 successfully, you can seek relief from your creditors while making your company profitable again.

Creating a plan that pays off debt

Multiple companies have used Chapter 11 to reorganize their debts and make a plan to turn their business around. Like all bankruptcies, a court orders an automatic stay, which prevents creditors from trying to collect debt. This stay allows the company some temporary breathing room to gauge their situation.

Then the owners of the business create a plan that explains how much they can pay to each creditor. If a court approves it, the judge can discharge debt that the reorganization can’t pay off.

You can use bankruptcy to improve your profitability

The success of your business after bankruptcy depends on your ability to make a profit. While you go through bankruptcy, you can keep your company running. Since you have a plan that pays off your debt, you can focus on improving your margins.

Bankruptcy gives you time to step back and evaluate your company’s profitability. If the debt reorganization plan doesn’t help you improve, then you may end up having to close.

But like many businesses, you may find Chapter 11 gives you some relief from the stress of paying creditors. Instead of focusing on how to stay afloat, you can use bankruptcy to trim away the parts of your business that weigh you down and focus on what makes your company successful.