Bankruptcy for Small Businesses

The entrepreneurial spirit is one of the touchstones of American culture that has made our country so strong. The willingness of driven individuals to step out and risk their financial stability for the sake of a business they believe in has been a catalyst of our country’s growth. However, a recent study by the University of Nevada shows that one in seven bankruptcies are filed by individuals tying to cope with the failure of a small business. While corporations or partnerships cannot file for bankruptcy, Chapter 7 and Chapter 13 are often used by entrepreneurs who are trying to deal with personal and business debt.

Since small businesses are unincorporated, they don’t have the same restrictions as larger corporations, which means that any business and personal debts are the responsibility of the business owner. So when a small business owner gets in over their head, the business doesn’t file for bankruptcy, rather the individual files. For small business owners who file for Chapter 7 bankruptcy there are several protections which make it an attractive choice. If you are a sole proprietor, you operate your business by yourself so your business debts are also your personal debts, so they can be dismissed in a bankruptcy case.

There are several benefits for small business owners to file for bankruptcy. First of all, there is uniform protection in the United States on future assets, which offers a fresh start to the debtor. So, if you are a business owner who files for bankruptcy, you can start a new business or a new job without worrying about having future earnings seized to pay pre-bankruptcy debt.

Another important benefit for small business owners filing for Chapter 7 bankruptcy is exemptions. Exemptions vary from state to state and are set values above which debtors must surrender property. States with higher exemptions are more attractive to debtors because it protects more of their property. It is important to note that for small businesses filing for bankruptcy, the filer must also list all assets both business and personal, which makes the exemption value of the state an important detail to know before filing. It can make the difference between keeping a home or having it liquidated.

If you are a small business owner who is seriously considering bankruptcy and you live in New York, you need to consult with an attorney who understands New York bankruptcy laws. Not all bankruptcy attorneys are the same. While the process appears complicated, a New York bankruptcy lawyer will be able to help you understand your options and avoid making bad decisions. You get one chance to file bankruptcy right the first time. When bad things happen to good people, the New York bankruptcy lawyers at Doyaga and Schaefer are here to help. Stop the harassment, the worry, the financial stress. For a free same-day consultation, call 718-488-7500 or 516-656-7500, or visit our website at bigapplebankruptcy.com for more information.