Working with a professional will expedite the process and ensure you choose the best type of bankruptcy for your situation. The author is not an attorney or tax professional. Before proceeding with a bankruptcy, find a business bankruptcy attorney to assist you with the process. This article was originally written on March 5, and updated on January 26, This article currently has 20 ratings with an average of 4.
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Your email address will not be published. Save my name and email in this browser for the next time I comment. I filed for bankruptcy. I will let him read your article to help him understand his options before making a decision. Information is collected in accordance with our Privacy Policy. By continuing you agree to our terms. Frequently Asked Questions About Business Bankruptcy As we said at the start: business bankruptcy law is similar in many ways to consumer bankruptcy, but there are key differences, and you likely have questions like the ones below.
Are you personally liable for your business debts? Find out if you meet the requirements and can file for bankruptcy. Closing Your Business. Closing an LLC is not as simple as locking the door and walking away. There are several steps you must take to protect yourself from liability and withdraw remaining assets from the company. When an LLC goes out of business, officially dissolving it is an important step that will shield the business owner from future liability.
Not everyone with debt problems should file for bankruptcy. Here's a look at some of the factors you might want to consider. If money is a tool, then credit is the tool belt.
Letting your finances get out of control is a sure-fire way to find yourself re-filing for bankruptcy. Responsible spending begins with the way we think and what we know. Educate yourself on money and credit. Learn how to close a business properly, how to find and file the legal forms you need, and more. Discovering what debts the court can and cannot wipe out when you file for bankruptcy may surprise you. Read on to find out how this would affect you.
Starting a Business. As a business owner, you have many options for paying yourself, but each comes with tax implications. Managing Your Business. What would you like to name your LLC? Need time on your business name? Start now and decide later. Overview of Corporate Limited Liability When you form a corporation or an LLC it becomes a separate legal entity apart from its owners. Cosigning or Personally Guaranteeing Business Debts If you cosign on a business loan, you are as equally responsible as the corporation or LLC to pay it back.
Pledging Your Property as Collateral If you have a new company or your company does not have many assets, a creditor may require you to provide some sort of collateral before approving the loan. Piercing the Corporate Veil Above we discussed the ways you can voluntarily make yourself personally liable for a corporate or LLC debt.
Courts will be more likely to pierce the corporate veil if: Corporate formalities, such as holding annual meetings and keeping minutes, were not followed. Certain owners exerted too much control over the corporation or LLC. Owners commingled personal funds with company funds or used personal funds to satisfy company obligations.
This depends on several factors. First, if the bankruptcy trustee has liquidated the business, then no, you cannot continue to operate your corporation or LLC. However, it is very rare for this to happen. More often, a business has no or only nominal net value, and the Chapter 7 Trustee does not liquidate the business.
Second, if the Chapter 7 trustee did not liquidate the business, then you need to keep in mind that if you want to operate your business after bankruptcy, you will most likely have to continue operating your business during the bankruptcy case. Any increase in value of the business that occurs during the pendency of the bankruptcy case belongs to the bankruptcy estate. The bankruptcy case lasts until the bankruptcy trustee closes the estate, so if you intend to keep operating the business, you need to be cautious in creating new contracts and receivables.
Third, consider the remaining business debt keep in mind that a personal bankruptcy only eliminates personal guarantees for business debt, not the business debt itself. If the business assets are subject to a bank lien, the bank must continue to get paid by the business in order to prevent the bank from recovering the business assets.
If the business has other debt, those creditors have a right to be paid by the business as well. It often does not make sense to continue operating a business after bankruptcy. Fourth, consider whether it would be easier, simpler, and less stressful to close the business and form a new and different business. If you are a business owner and are considering filing bankruptcy for yourself, your business, or both, your case will be complex. Facebook Twitter Linkedin.
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