The main reason many business owners file for bankruptcy in Florida is that they have personal debts intertwined with their business debts. If this sounds familiar, then you may want to file for Chapter 7 liquidation bankruptcy in addition to, or in place of, settling your business debts in other ways.
Many small-business owners may not use this option for a simple reason: They do not know it exists. This can lead to liability management strategies that are less than ideal. Here are some of the most common pitfalls of individual proprietors in high-debt situations.
The first thing you should probably know is that you would want to consider which debts you would want to prioritize. As mentioned on FindLaw, there could be some ways for you to generate revenue that you have not yet tried, such as filing suit against clients who owe you money. Combined with bankruptcy, these efforts could constitute a strategy that gets you out of debt quickly and efficiently.
It is important to consider both the type of the debt and to whom you owe it. Bankruptcy has the potential to relieve you of many unsecured debts, but there are certain exceptions. For example, money you paid to friends and family may be subject to revocation during the bankruptcy process.
By the same token, it may not make sense for you to pay off certain debts if you believe you could have these discharged by the bankruptcy process. Since liquidation would involve selling off your assets to pay as much of your debt as possible, it may make sense to attempt this in some cases by yourself before starting a formal process. Your property would probably command a higher price on the open market then it would if auctioned by the State of Florida.
There is no one solution for debt. Every situation is different. Please do not think of this as legal advice; it is only meant to be general information.