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You will often hear a lot about personal bankruptcy and how it can affect your home and family, but what if you are an owner of a small business? The bankruptcy attorneys at Robinson, Seiler & Anderson in Provo can help you with all over your bankruptcies needs as a business owner. Below are just some of the things that could happen when you file for bankruptcy and the different types of bankruptcy to consider filing with a small business.
Filing Chapter 7 Bankruptcy
This type of bankruptcy is referred to as liquidation. Chapter 7 bankruptcy filing is suitable for a business that does not plan on staying open. This is because this type of filing does not include any type of repayment plan. This is the suitable choice for sole proprietors and small businesses. However, the bankruptcy code allows for the debtors to keep some “exempt property.” But with this type of filing, it is expected that there will be some sort of loss of property. Consulting with your attorney at Robinson, Seiler & Anderson in Provo before filing for a Chapter 7 bankruptcy is always recommended.
Filing Chapter 11 Bankruptcy
This type of bankruptcy allows your business to recover. So Chapter 11 is referred to as repayment and sometimes reorganization. The filing of a Chapter 11 bankruptcy is suitable for corporations and limited liability companies although some sole proprietorships have chosen to file Chapter 11. Because it allows an organization to recover and restructuring is included, Chapter 11 does involve additional scrutiny by the bankruptcy courts. Small businesses that file for Chapter 11 bankruptcy are treated differently than regular bankruptcy cases and are called a “small business case.” A small business case is referred to by the bankruptcy code as a case with a “small debtor.”
The Impact of Filing for Bankruptcy
In the case of a sole proprietor, if you as the business owner choose to file for Chapter 7 bankruptcy, the business automatically files, as well. This is the case because you are a sole proprietor. There is nothing that separates you, the owner, from the business. Because there is no separation when a sole proprietor files for bankruptcy, their personal credit standing is a risk. Chapter 11 bankruptcy is considered to be the choice for businesses with a large amount of assets. Although Chapter 11 bankruptcy affords your business the chance for reorganization and restructuring, it often is a complicated and costly process. You will need to retain an accountant and a bankruptcy attorney from Robinson, Seiler & Anderson in Provo to assist you with these matters although the bankruptcy code makes it possible for small businesses to file.