Filing for bankruptcy may also help small business owners. If you are a sole proprietor of a business, and the business is definitely failing, you can file for Chapter 7 bankruptcy.  Much of the property used for the business would not be exempt and would be sold or distributed to creditors. However, the owner's personal property would likely be exempt via federal or state exemptions, and thus protected from debt collection; the business debt would be discharged.  Sole proprietors can also file for Chapter 13 bankruptcy and file a repayment plan to repay the business debts without losing your house, for instance.

Partnerships and corporations, regardless of size, cannot file for Chapter 13 bankruptcy.  Chapter 7 bankruptcy allows for simple liquidation of a small business's assets (but the debt is not discharged).  Large or complex businesses seeking bankruptcy protection may have to file Chapter 11 bankruptcy, which is considered to be very complex form of business reorganization of the company.

As with other aspects of bankruptcy, read carefully and consider your situation; for specific questions about your particular situation, see an attorney before filing.