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Many small businesses faced with bankruptcy find it hard to keep up with their operations. Due to lack of enough information, one might think that the only way out of insolvency is to sell off all assets and pay the creditors with the proceeds that accrue.

What if the proceeds are not enough to cater for all the creditors? You risk being sued for the balance that you owe in a court of law.

It is therefore essential that you familiarize yourself with what the law has got to say about bankruptcy, be it for individuals, businesses or companies. In fact, even municipals and cities go through insolvency. So do not think that yours is a unique case.

With this background information, lets us note that there are different chapters under the law in which one can file for insolvency. They are chapters 7, 9, 11, 12 and 13. While 7 and 13 apply more for individuals, chapter 11 works more for businesses because it is more like a re-organization strategy that gives the business owners and managers time to come up with a more workable structure as they draw out a plan on how to repay their debts.

This is not to say that other chapters cannot be applied. In fact, chapter 7 can work best for a business which sees no future ahead, that is to say it can work for a business that wants to completely close down, either because the debts are too many or because the assets cannot be plowed back to make any substantial gains after bankruptcy.