If your small business is facing financial difficulty and there is no expectation of reorganization, a Chapter 7 Bankruptcy might be your ideal answer. If your small business is a limited liability company (LLC), partnership or corporation AND you do not want to or cannot continue operating your business, a Chapter 7 Bankruptcy can provide a relatively quick and easy way to close the business and liquidate business assets. The chief disadvantage with filing a business Chapter 7 Bankruptcy is that if you are personally liable for any of the business debts, you will also have to file a personal bankruptcy or remain responsible for those debts. Furthermore, there are no exemptions to protect any of the business’ assets and your business does not receive a discharge of its debts. Instead, the Trustee sells all of the business’ assets to pay its creditors and shuts the business down.
If your small business is a sole proprietor, a Chapter 7 Bankruptcy will not only help you wipe out the business debts, it will also wipe out your personal debt. This is because you and your business are considered to be one in the same. You can also use exemptions to protect business assets and continue to operate the business after bankruptcy.
As a sole proprietor, you can also file a Chapter 13 Bankruptcy. A Chapter 13 Bankruptcy allows a sole proprietor to keep all of its assets and pay back all of your debts through a set repayment plan OR pay back a portion of the debt through a repayment plan. However, LLCs, partnerships and corporations cannot file a Chapter 13 Bankruptcy.
Knowing your options can make the bankruptcy process less stressful and much easier. Speak to an attorney today to find out about your options by contacting the Law Office of David M. Goldman, PLLC at (904) 685-1200.