Fewer small business bankruptcies being filed, but many still need help

At the midway point of 2012, small business bankruptcy filings were at their lowest levels since 2007. Nationwide, small business bankruptcies were down nearly 17 percent in the second quarter of this year compared to the first, according to the Equifax Small Business Bankruptcy Report.

The number of small business filings peaked in the second quarter of 2009, at the height of the Great Recession. As economic conditions slowly improve, small businesses are faring better; since quarter two of 2011, there have been four straight quarters of decline in the total number of U.S. small business bankruptcies.

Yet, many small business owners are still struggling financially. Every business involves a level of financial risk, and sometimes following your dreams means putting a lot on the line. If your business is suffering, bankruptcy may be the solution to get your financial affairs back on track.

Chapter 7 bankruptcy can help you get out from under business debt

The more closely tied you are personally to your business, the more difficult it can be to untangle your personal and business finances. If you run a sole proprietorship, it is especially important for you to retain a knowledgeable bankruptcy attorney to guide you through the process, because business creditors may be able to reach your personal assets.

If your business is in the form of a small corporation or an LLC, you still may be personally liable for business debts. Even with businesses that are their own distinct entity, you may have personally guaranteed the business; you may also be the primary business debtor. Either can make you liable for the debts of your business.

So what can you do about it if your business is underperforming and is overwhelmed by debt? You may be able to fully discharge the debts your business has accumulated in Chapter 7 bankruptcy. In a Chapter 7 case, nonexempt property or collateral may be sold to pay your creditors. For secured debts, if the property securing the loan has no equity or is worth less than the exemption amount, the property will not be sold. After Chapter 7 bankruptcy, you will be discharged from any personal obligation to repay the business's debts.

Speak with a bankruptcy attorney to explore your options

It can be difficult for a business to go through a bankruptcy and survive, but it is not always impossible. In some cases, a sole proprietor can start over after bankruptcy under a different business name. Alternately, you may want to get out free and clear from the debts of your business and move along to other endeavors - after all, there is hardly a self-made millionaire in America who has not come on hard times at least once before ultimately backing a winning business idea.

Whatever your goals, if your business is facing unmanageable debt, you have a better chance of reaching them if you have the right help. The right attorney can help you get the most out of bankruptcy - and will give you an honest assessment as to whether bankruptcy is the best alternative for you and your business. Talk to a knowledgeable attorney today to learn more about what bankruptcy can do for you and your business.