Filing bankruptcy is a big decision; however, if you own a small business, you have much more at stake than just your personal finances. Your personal bankruptcy could affect your small business depending on the business structure and your financial situation. As a small business owner, you need to consult with an experienced bankruptcy attorney before you file bankruptcy to discuss ways to protect your business.
Filing Bankruptcy as a Small Business Owner
A corporation, limited liability corporation (LLC), and a partnership can file a bankruptcy because each of these companies is considered a legal entity. If you are a sole proprietor, you and your small business are one legal entity. You cannot file a bankruptcy just for your business and your small business must be included in any personal bankruptcy case you file. Your business debts are your personal debts and the business assets are your assets. Therefore, if you file a personal bankruptcy, the debts and assets of your small business must be included in your personal bankruptcy.
As a sole proprietor, you can file either a Chapter 7 or a Chapter 13 bankruptcy case and your small business will continue after the bankruptcy case is filed, if that is what you desire. In a Chapter 7 case, the trustee will review the business assets and your personal assets to determine if any assets have non-exempt equity that can be liquidated to pay your debts. Before we file your Chapter 7 case, we will review each of your assets to determine if any of those assets are at risk. If it appears that an asset may be at risk, we will discuss your options to protect those assets or discuss if it is in your best interest, in the long-term, to abandon those assets to get rid of your debts.
If you file under Chapter 13, you use your income from your small business to fund your Chapter 13 plan as you would if your income came from an employer. You continue to operate your business as you did prior to the bankruptcy case, pay your bills, and pay your plan payment. Your business debts must be included in your Chapter 13 plan; however, if a supplier refuses to work with you because of an outstanding debt, we will discuss how to deal with that on a case-by-case basis. For most small business owners, this is not a problem.
Because each small business is unique, there will be case specific issues. During your consultation, we can discuss your small business in detail to formulate a plan that will provide you with debt relief while protecting your business.
Contact an Experienced Mount Holly Bankruptcy Attorney
Personal Approach, Professional Service, Affordable Payment Plans
The Law Office of Travis J. Richards, LLC is a full-service Mount Holly bankruptcy law firm focused on Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, debt consolidation, credit repair, tax liens, student loans, and foreclosure. We represent clients in Burlington County and throughout South Jersey.
Contact our office at 609-267-5297 to schedule your free consultation to discuss bankruptcy and non-bankruptcy alternatives. You may also use our convenient online contact form and one of our friendly, professional staff members will contact you to answer your bankruptcy questions and/or schedule a free consultation with Travis J. Richards.