What Are The Different Types of Commercial Bankruptcy Available for Businesses in PA?
Commercial bankruptcy may be the lifeline you need if your business is drowning in debt. Choosing the right type of commercial or business bankruptcy, whether it’s Chapter 7, Chapter 11, or possibly Chapter 13, is crucial because it can significantly shape what your business’s future looks like. Each bankruptcy option offers different protections and outcomes, but the best option will depend on your goals, business structure, and how much you owe.
At Cunningham, Chernicoff & Warshawsky, P.C., our Harrisburg bankruptcy attorneys can guide you through selecting the right bankruptcy option and filing for bankruptcy to help you make a smart, strategic decision.
Understanding Your Business Bankruptcy Options in PA
Sometimes, debt piles up faster than revenue, or there may be cash flow problems, particularly in tough markets or during economic downturns. While you may see bankruptcy as a failure, it’s a practical legal tool you can leverage to resolve financial distress, whether you’re planning on reorganizing for a stronger future or closing down gracefully.
In Pennsylvania, businesses usually file under Chapter 7, 11, or 13 bankruptcy. Each option has different eligibility requirements and consequences:
Chapter 7 Bankruptcy
If your business is beyond saving, this option lets you close it down in an orderly manner. A court-appointed trustee sells off your business assets to pay creditors. It’s usually used by sole proprietors, small LLCs, or partnerships that have no realistic path forward.
Chapter 11 Bankruptcy
This option is for businesses that don’t want to close their business while restructuring debts. You work with creditors and the court to create a plan to pay off what you owe over time. Chapter 11 is common for corporations or larger businesses. However, recent changes have made it more accessible for small businesses, particularly under Subchapter V, which streamlines the process and lowers costs.
Chapter 13 Bankruptcy
Only sole proprietors and individuals can file for this bankruptcy chapter. This Chapter lets you keep business and personal assets while paying down debt through a structured plan. If your business income is tied to your personal finances, this may be a useful option.
How a Harrisburg Bankruptcy Attorney Can Help You
Bankruptcy law is complex, and commercial cases often involve multiple creditors, personal guarantees, and tax implications. One wrong move can cost you valuable assets or, worse, expose you to personal liability. A Harrisburg bankruptcy lawyer can:
- Help you understand how your business structure and financial situation affect your bankruptcy options to ensure you select the most appropriate type for you.
- Advise you on whether your personal or business assets are at risk.
- File the appropriate paperwork, handle court appearances, and negotiate with creditors.
- Make sure you meet all the deadlines and comply with the legal requirements.
Let Our Reputable Harrisburg Bankruptcy Lawyers Secure Your Financial Future
If you’re missing loan payments, facing lawsuits, or struggling to make payroll, bankruptcy may offer a way to reduce debt, protect your personal assets, or restructure your obligations while you stay in business. However, each bankruptcy chapter carries long-term consequences, from how it affects your credit to whether you can start another business in the future.
At Cunningham, Chernicoff & Warshawsky, P.C., our Harrisburg bankruptcy attorneys can help you weigh the pros and cons of each chapter and make an informed, strategic decision that aligns with your goals. Contact us online or call 717-260-3527 to schedule your complimentary consultation today.