Filing for personal bankruptcy can help you get out of debt; however, if you own a small business and operate the company as a sole proprietorship, you may want to consider how your business may be affected by this bankruptcy if you decide to file. In this situation, you may end up losing some or all of your business assets, which is why you should thoroughly discuss your situation with a bankruptcy attorney before you file. Here are several things you should know about this.
How Bankruptcy Courts View Sole Proprietorships
When a bankruptcy trustee receives bankruptcy filing documents from a person who owns a business, he or she may want to fully examine the business, its assets, and its ability to make income. This is especially true if the business is a sole proprietorship. A sole proprietorship is not a legal entity of its own. The owner of the business fully owns the entire company and files only one tax return for him or herself and the business.
Because of the way sole proprietorships work, the trustee has the right to view all business assets as your own personal assets. In fact, when you file your paperwork for the bankruptcy, you will legally be required to list all the business assets you have. You could also list all the business debt you have, if you are hoping to find relief from this debt too.
You Could Be Forced To Close Your Business
There are times when bankruptcy trustees will force a small-business owner to close after filing for bankruptcy; however, this is not always the case. There are also times when a business owner can continue operating the business even if he or she filed for bankruptcy. There are two main factors that may affect this decision; however, all cases are handled on an individual basis. Here are the two factors that may affect your case:
These two factors may affect the outcome of your case, but your attorney is also likely to discuss the difference between exempt and non-exempt assets.
Learn The Difference Between Exempt And Non-Exempt Assets
Whenever anyone files for bankruptcy, the person will never be forced to surrender every single thing he or she owns. Instead, the court will allow the person to keep assets called exempt assets. Assets considered exempt are those the court will let a person keep, and they often include things like clothing and furniture. They can also include other assets, though.
If you explain to the trustee that you must keep certain assets in order to earn money, the trustee might exempt them. If this happens, you will not be forced to turn them over during your bankruptcy case.
If you would like to find out more information about filing bankruptcy if you own a small business, contact a bankruptcy attorney in your area today.Share
31 March 2016
Hello, my name is Neil Gamford. Welcome to my site about bankruptcy proceedings. After my divorce, I was left near penniless and without a place to stay. I was paying all of my income to alimony and my remaining debts. Although I had a solid payment plan in place, it was getting difficult to cover my financial obligations without a home. Luckily, I met with a bankruptcy attorney, who helped me find a way to discharge my debts and start over. I hope to share the information I learned throughout that process with you through this site. Please feel free to visit anytime.