Most people prefer to file for chapter 7 business bankruptcy because this process is quick, and the filers can eliminate debts without repaying any amount to creditors. To file This petition, you have to be qualified for a chapter 7 bankruptcy petition. This petition protects your property and eliminates the debts. Of Course, you can continue your business if you file chapter 7 business bankruptcy under some circumstances discussed below. The Bankruptcy lawyer helps you to prepare a chapter 7 bankruptcy form and navigate the chapter 7 process.
Are you eligible for filing a Chapter 7 Business Bankruptcy?
It is not easy for everyone to be eligible to file for chapter 7 bankruptcy. This partition suits the people who have a valuable property and less income. People with higher incomes and many assets and properties are eligible for chapter 13 bankruptcy.
It is a two-step process; if your family income is low, you will automatically be eligible for chapter 7 business bankruptcy.
Situations you should own if you want to continue your business.
Here are some types of businesses you should own, which will help you determine what you need to protect so you would not lose your company.
Limited liability companies and Corporations:
If you have an incorporated business, the company is separate from your entire property. The equipment, inventory, and accounts receivable belong to the company. You don’t own the company assets. You only own shares and stocks.
A sole proprietor is a person who owns an unincorporated business. That means you don’t have any partners in your business or company. Being a sole proprietor, all the equipment, account receivable, and inventory belongs to you only. According to chapter 7, business bankruptcy, there’s no difference between your debts and assets.
Partnerships are quite tricky because, just like being a sole proprietor, the partners are also personally liable for the business’s debts. So the debts are included in your bankruptcy. In this case, the litigation mostly arises from the partner’s side. When this happens, contact a bankruptcy attorney before filing a claim against your partner.
Situations you should ignore if you want to keep your business in Chapter 7 business bankruptcy.
Sole proprietor of a product-oriented business
If you are a sole proprietor so would need products to conduct the company and business personally. If you want to avoid absolving everything, you should count on the trustee closing the business for an inventory of equipment, products, company publications, and furniture.
If you own 100% of shares or Interest in a corporation or LCC
This situation is especially problematic. You have to exempt Your ownership or share Interest in the company. However, there is no specific law for exemption. You can use a wild card that will allow you to protect any asset you want. And there is one more situation like this: if you own a portion of shares or Interest in a saleable corporation or LCC.
Partnership in a business
There are different laws in different states to protect partnerships in bankruptcy. In most partnership agreements, a clause is also the company if the bankruptcy case is filed. This area is very complicated, so it is better to consult a business bankruptcy attorney.
Hire a bankruptcy attorney today
Bankruptcy is a step-by-step qualification process. This petition provides almost 50 to 60 pages of instructions. And the rules apply to every case, so you must complete all the steps. Therefore, hiring a professional bankruptcy attorney when dealing with a chapter 7 business bankruptcy is essential.