Just like individuals, businesses can also go through rough patches. Sometimes, taking control of finances is not easy and you might have to let go of your business to cut your losses. If you are facing financial issues in your small business and have no hope of reorganizing the debts, then Chapter 7 bankruptcy is the best way to get rid of your debts, says Los Angeles based bankruptcy law firm Recovery Law Group.
Small businesses can be either a partnership, a corporation or a limited liability company (LLC). If, you don’t wish to continue your business further, then filing for Chapter 7 bankruptcy will help you get rid of your debts in a faster and easier way. Your business will be closed, and assets liquidated in Chapter 7 bankruptcy. However, if, you are personally liable for any business debt, you might have to file for personal bankruptcy to get rid of those; otherwise, you will remain responsible for those debts. Additionally, there aren’t any exemptions to protect your business’ assets. Moreover, the business will not receive any discharge of debts. The bankruptcy trustee will sell off all the business’ assets to pay the creditors and then shut the business down.
In case you are the sole owner of your business, Chapter 7 bankruptcy can be used to eliminate not only business debts but also personal debt. This is because the business and the owner are considered the same. In this case, you can also use exemptions to protect business assets which can be used to continue running the business after bankruptcy. Sole proprietors also have the option of filing under chapter 13. This will allow you to keep all your assets and repay your debts through a repayment plan. Unfortunately, LLCs, corporations, and partnerships do not have the option of filing a chapter 13 bankruptcy.
If you wish to know more about your options regarding small business bankruptcy, you should speak with experienced bankruptcy lawyers at 888-297-6023.