Chapter 7 bankruptcy is an important tool for people facing insurmountable debt. When the monthly costs and expenses exceed the monthly income, when collectors are calling regularly and when you are trying every month to figure out which bills not to pay in order to stay afloat, you have a serious debt problem.
As an owner of a small or mid-sized business, your concerns about bankruptcy might seem even more complicated, as you might not know the distinctions of liability for your business versus your own individual liability to creditors. You can learn more about Chapter7 bankruptcy in order to make smart decisions and to protect your financial interests going forward.
What are the challenges for business owners?
As a business owner, you have two sources of potential liability. If you are having personal debt problems, your business is probable in trouble too. This means debt liability problems are attacking your business as well as attacking you personally.
While most businesses are structured to help business owners avoid liability personally for the business’s debts, there are still ways that creditors and their collections agents could go after you for those business debts. Further, the lack of income being generated by a business that is underwater will only exacerbate your personal financial challenges.
Chapter 7 for business owners
Although most business debts are handled though Chapter 11 bankruptcy, your personal debt problems might be best handled with a Chapter 7 bankruptcy. Further, a Chapter 7 bankruptcy could help protect you from creditors and their agents putting a lien on your home, garnishing your wages or engaging in other collections activities against you personally in order to collect for any leftover business debts. You can learn more about the different types of bankruptcy at the US Courts website.
Being a business owner does not have a lot of impact on the process of filing for Chapter 7 bankruptcy. The process looks much the same as it would for anyone else. The best thing to do is seek counsel from an attorney experienced in Chapter 7 and Chapter 11 bankruptcy in order to discuss your options.