If you run a small business that is in a position of heavy debts, it’s very important you can work to protect your personal assets. If you’re a sole proprietor or in a general partnership, a business creditor may be able to start coming for your personal assets in order to satisfy your company debt. Even if your business is incorporated or an LLC there is a chance that some of your personal assets that are linked to the business through cosigning could be made available for liquidation.
Here are some of the options that you have to protect your assets and submit a formal small business bankruptcy:
Chapter 7 bankruptcy:
A chapter 7 bankruptcy for small business is an excellent option for business owners that are interested in closing their business permanently. A chapter 7 bankruptcy will eliminate liability for the business debts but close the business completely. You’ll be wrapping up your business entirely and each of your business assets will be sold off to pay creditors. A chapter 7 negative for your business will not wipe out your personal obligations and if you’re filing as a sole proprietor each of your business debts will be considered as a personal debt as well. It’s usually advised to file for personal chapter 7 bankruptcy if you are in a sole proprietorship.
Chapter 13:
A chapter 13 bankruptcy is available for sole proprietors but it is not a small business option that’s available for other types of business owners. Filing for Chapter 13 bankruptcy is a sole proprietorship is an excellent way to erase some of your personal liability for business debts and to make sure that you can wrap up and close off these debts without having to close your business.
If you are facing insurmountable debts as a small business it’s important to contact a bankruptcy attorney to help you get the financial help that you need. A bankruptcy attorney can help locate your finances and determine which bankruptcy option is going to be best for the future of your company. Contact us today for a consultation if you are a small business facing financial difficulty.
This article was written by Alla Tenina. Alla is one of the best tax attorneys in Los Angeles California, and the founder of Tenina law. She has experience in bankruptcies, real estate planning, and complex tax matters. Click Here for more information. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Information on this website may not constitute the most up-to-date legal or other information. This website contains links to other third-party websites. Such links are only for the convenience of the reader, user or browser; the ABA and its members do not recommend or endorse the contents of the third-party sites.