Running your own business can often be a precarious venture. If your business is experiencing serious financial challenges, you need to realistically assess whether it has the potential to succeed. Whether you want to try to salvage the business or just shut it down, a Chapter 7 (liquidation) bankruptcy filing may be helpful. First, though, you need to determine whether you have personal liability for the debts of your company. If you operated as a sole proprietorship or a general partnership, you’ll still be responsible for the obligations of the business, so a Chapter 7 petition for your business won’t provide you with any benefit.
The Benefits of a Chapter 7 Bankruptcy Filing
Even if you have personal liability for the debts of your business, a Chapter 7 petition can offer some benefit. With a Chapter 7 petition, you are allowed to liquidate, or permanently discharge, certain debts in exchange for the sale of some of your assets. Both state and federal law allow you to claim some property as exempt, so you won’t lose everything.
When you file for any type of bankruptcy protection, though, you immediately get the full protection of the automatic stay. The automatic stay prevents your creditors from calling, writing or seeking to collect the debt from you through any means other than the bankruptcy proceeding.
When Congress enacted the 2005 revisions to the bankruptcy laws, a new provision was added, requiring that debtors submit to a “means test” to qualify for a Chapter 7 filing. That test, however, only applies to consumer debt. If you are filing a Chapter 7 petition for your small business, you don’t need to undergo the means test.
Contact Heath, TX Bankruptcy Attorney Carrie Weir
I provide a free initial consultation to anyone with questions or concerns regarding a bankruptcy filing. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.
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