What Small Business Owners Should Ask A Bankruptcy Attorney

Bankruptcy, or not being able to repay your debts and meet financial obligations, is the worst-case scenario for many small business owners. To survive it, you’ll need the help of a specialized bankruptcy attorney. These professionals know the ins and outs of bankruptcy in your area and state. They may be able to save your business. However, while an attorney can give you great advice, you need to know the right questions to ask them. Below are the five most important questions to ask a bankruptcy attorney in an initial consultation.

Are You An Attorney?

Many law firms save money by employing few attorneys. It makes a certain amount of sense. A lawyer is expensive. It’s a waste of money to have them do work that can be done by a para-legal or other professional. Not everyone working for a law firm needs to have passed the bar. However, many larger firms cut corners by entrusting initial consultations to salespeople. These non-licensed professionals are there to get you to sell. In this consultation, you do need legal analysis, which a non-lawyer can’t give. Therefore, make sure that straight away you are actually talking to an attorney who understands the consequences of life after bankruptcy.

Do I Need To Declare Bankruptcy?

You should ask if bankruptcy is a necessity. Many good bankruptcy attorneys actually save people from bankruptcy. The situation may seem very grim from your perspective, but it might not be quite that black. Especially if your business is still open and making money, it might be possible to come to an out-of-court settlement with your creditors. A bankruptcy attorney will be able to look at your case and see if a settlement is possible. They may even be able to negotiate it for you. A bankruptcy is costly, difficult, and irreversible. Every option should be considered before you file for it.

Can I File For Chapter 11?

Ask about filing chapter 11 bankruptcy. There are multiple types of bankruptcy you can file for. The two most common for business’ are chapter 7 and chapter 11. Chapter 7 wipes out specific business and personal debt. However, a state appointed trustee can seize your business and some personal assets and liquidate them to pay off your creditors. In chapter 11 you have to repay all debts, but you can keep the business open and are granted more time flexibility in repayment. This gives you a better chance of coming out if bankruptcy with your business intact. However, it is more expensive to file for chapter 11, and the state won’t let you if you can’t prove you’ll pay the money back. You should check with the lawyer to see which one is best for you.