What You Need To Know About Filing For Bankruptcy

The decision to file for bankruptcy is never an easy one. If you are a small business owner, increased competition from large corporations, rising prices, declining consumer interest or any number of factors can conspire to drive your business down leaving you with few options. If you are unable to turn it around, you may find yourself contemplating Chapter 7 bankruptcy, which involves you ceasing all business operations and shutting down. A court-appointed trustee will oversee the dissolution of the business, sell off the business assets and try to pay down as much of the business’ debts as possible. Chapter 7 bankruptcy lawyers in Tampa can answer your questions about this process.

Who Is Eligible to File for Chapter 7?

Those who own their business as sole proprietors are not eligible to file for Chapter 7 bankuptcy as a business. The debts of the business are personal debts for which they are personally liable, so they are unable to file as a business. They can file for Chapter 7 as a person, but they will be unable to keep the proceedings separate from their personal assets and history. If your business has been incorporated or is a partnership, it is eligible to file for Chapter 7. The court will take over selling off the business’s assets and transfer the proceeds to the business’s creditors.

Chapter 7 Protection

Depending on how your business was conducted, the sales from selling off the business’s equipment and assets may not be enough to cover the remaining debts. What happens in this case will depend on the specific agreement under which the business was founded. If, for example, you co-signed with your business in order to obtain a loan, you may be personally on the hook for the remaining debts. One possible way of dealing with this is to both file for Chapter 7 personally and to have your business file for Chapter 7 at the same time. Chapter 7 bankruptcy lawyers in Tampa can advise you as to whether this is a feasible strategy.

Chapter 11 vs. Chapter 7

An entirely different form of bankruptcy protection is Chapter 11. Unlike in Chapter 7, where the entire business is dissolved, in Chapter 11, the business is reorganized under court supervision with the goal of hopefully “emerging” with a manageable debt strategy and viable path forward. Whichever form you are considering, it is important to discuss your options with a bankruptcy lawyer well ahead of time so that you and your attorneys can adequately prepare for the proceedings. In the year before you file, you will be unable to transfer ownership of any business assets. To get more help regarding bankruptcy law from chapter 7 bankruptcy lawyers in Tampa, call Robert Savage at 813-200-0013.