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 individuals tying to cope with the failure of a small business file one in seven bankruptcies. While corporations or partnerships cannot file for bankruptcy, entrepreneurs who are trying to deal with personal and business debt often use Chapter 7 and Chapter 13.

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, and 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.

Brian Reed. New York bankruptcy lawyers To consult with New York bankruptcy lawyers who specialize solely on bankruptcy, contact the attorneys at Doyaga and Schaefer at 718-488-7500 or 516-656-7500 for a free consultation.