It is important to work to protect your personal assets if you own a small business with heavy debts. A business creditor might be able to come after your personal assets if you are a sole proprietor, general partnership, or a partner in the company to pay off your company debt. There is a possibility that your personal assets, which are tied to your business via cosigning, could be liquidated.
These are the options available to you for protecting your assets and filing a formal small-business bankruptcy.
Chapter 7 Bankruptcy
Small business owners who are looking to close their business permanently can consider filing chapter 7 bankruptcy. Chapter 7 bankruptcy will not only eliminate your business’s liability but also close your business. Your business will be completely wound up and all of its assets will be sold to creditors. Your personal obligations will not be affected by a chapter 7 bankruptcy filing. If you are a sole proprietor, all of your business debts will also be considered personal debt. If you’re a sole proprietor, it is advisable to file personal chapter 7.
Although it’s possible for sole proprietors, it isn’t available for small-business owners. A sole proprietorship filing for Chapter 13 bankruptcy can help you to eliminate some of your personal business debts. It also allows you to wrap up and close these debts without losing your business.
A bankruptcy attorney can help small businesses that are struggling with insurmountable debts. A bankruptcy attorney can help you determine the best bankruptcy option for your company’s future. If you have a small business in financial trouble, contact us today to schedule a consultation.
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.