Bankruptcy May Be the Only Way Out

• If your business simply has more debt than it can handle, the only option available to you may be to declare bankruptcy. In Chapter 7 bankruptcy, the business will close down and its assets will be liquidated to pay creditors. According to the U.S. Securities and Exchange Commission, in a Chapter 11 bankruptcy, a business is relieved of some debt and allowed to continue operating in a restructured manner.
  
  

There May Be Other Options

• Before declaring bankruptcy you should try to negotiate agreements with your creditors. If you are able to work with your creditors to avoid bankruptcy it will keep you in business (which is not possible in a Chapter 7 bankruptcy) and will avoid the harm that a Chapter 11 bankruptcy could cause your reputation and, according to Entrepreneur.com, it will be less costly due to the time and expense of a Chapter 11 bankruptcy.
  
  

Bottom Line

• If you have another option, it is always better to avoid bankruptcy. Sometimes, however, there are no other options, in which case bankruptcy is the only possible solution.