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4 Steps to Filing for Small Business Bankruptcy

By Neetal Parekh | Last updated on
If your personal business has reached the point of filing for bankruptcy, you have likely learned from the experience and want to expedite the process and move forward.  Before you can focus on reinventing yourself, and your credit, you'll have to take care of filing for bankruptcy.  Here is a breakdown of four steps to take to complete your small business bankruptcy.

1. Hire an attorney.  Though personal bankruptcies can sometimes be handled by non-attorneys, for a small business bankruptcy you will need to file in bankruptcy court, and will have to represented by a licensed attorney.  Seek referrals and recommendations, and consult online directories such as FindLaw's Lawyer Directory to research your local options.  Look at the attorney's website, consider their experience with filing for personal business bankruptcy, and then do a phone or in-person consultation before engaging an attorney to represent you.

2. Gather your business records.  Your attorney will guide you about what records and papers will be needed for the small business bankruptcy filing, such as:

  • tax returns
  • assets and inventory
  • accounts receivable
  • list of creditors, including names and addresses
  • ledgers

3. Meet with the trustee.  About 30 days after your attorney files for bankruptcy, you will have a meeting with a trustee appointed by the bankruptcy court.  The trustee will review your schedule of assets to ensure that it properly distinguishes the nonexempt assets from exempt assets.  You will have to turn over nonexempt assets to the trustee, who will sell them and use the proceeds to pay off your debts.

4. Submit a reorganizational plan, if needed.  Your attorney will discuss the various bankruptcy options available, and if you choose a type of bankruptcy that requires reorganization, then you and your attorney will work together on creating a reorganization plan to be submitted to the court.


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