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Bankruptcy can happen as a result of your own fault or it could be as a result of genuine financial crisis that was otherwise not anticipated. By your own fault I mean, it could be due to carelessness in handling your money, or even operating your life or business without a clear budget.
Whatever the reasons could be, it is quite important to realize that there will be consequences which you will have to face and live with. When it comes to business bankruptcy, probably the most obvious consequence is that you will have to close down your business and have your employee dismissed.
However, this is subject to the chapter under which you file your insolvency petition. In most cases this will happen under chapter 7, which is also known as the liquidation chapter. If you file under chapter 13, you will have the chance to reorganize your finances and come up with a repayment plan as you continue with business.
If you are file for bankruptcy while in a partnership, the partnership will more likely than not be dissolved. This is unless the partnership deal that you signed provides otherwise. If there happens to be any loans that your partners had co-signed with you, they may be forced to pay up on your behalf. Once you have filed for insolvency, it may prove hard for you to start up a back up business as you name will remain in the insolvency records for a period not exceeding ten years.
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