Can a Small Business File for Bankruptcy?

1/4/2014

The short answer is yes, a small business can file for bankruptcy protection in the same way that a person can. A small business can file either Chapter 7, Chapter 11, or Chapter 13 bankruptcy, depending on whether

(1.) the business is an incorporated legal entity (such as a corporation or limited liability company)

(2.) you want to continue operating the business after the bankruptcy

(3.) you are personally liable for corporate debts; and

(4.) the amount and nature of the business' debts.

Chapter 7 erases most debt right away, but ends the business. In other words, the business ceases to exist as a legal entity, and all of its assets are sold and the proceeds distributed to creditors. Chapter 13 is not available to incorporated entities, but may be available to sole proprietors and qualifying partnerships. Chapter 13 puts you on a payment plan for a number of years.

With both Chapter 7 and Chapter 13, the business has to stop operating when the bankruptcy is filed. Filing Chapter 11 allows a business to continue operating and restructure debt, but is usually too cost-prohibitive, time-intensive, and uncertain to be a viable option for small business. Because Chapter 7 and Chapter 13 are more realistic options for small business, I'm not going to go into further detail about Chapter 11. For more information on the different types of bankruptcy, please see my earlier article on bankruptcy in this blog.

Business owners sometimes sign personal guarantees for business debt. This means that the business owner individually and personally promises to pay business debt in the event that the business does not. In such a case, the owner may wish to consider filing for bankruptcy as well because, if the business gets rid of the debt by filing for bankruptcy, the creditor will try to collect payment from the business owner.

Baland Law Office, P.L.L.C. represents business debtors and business owners in both Chapter 7 and Chapter 13 bankruptcy proceedings. If I think Chapter 11 is a better option for you, I will refer you to an attorney who specializes in Chapter 11. Please call (763) 450-9494 to schedule an appointment to discuss your situation today and find out whether declaring bankruptcy is the right option for you!

DISCLAIMER: Baland Law Office, P.L.L.C. is a debt-relief agency, and Timothy H. Baland, Esq. is a debt-relief agent. We help people like you to obtain bankruptcy relief.

WARNING: The information contained in this article does not constitute legal advice and may not be applicable to your situation. Reading this blog post does not create an attorney-client relationship between you and Baland Law Office, P.L.L.C. Tim is licensed in Minnesota stat You should always discuss your situation with an attorney before taking any action based on what you may read in this blog. To that end, please call (763) 450-9494 to set up an appointment to discuss your situation.

19 Comments

check for more info link

4/21/2014 12:11:02 am

A nice detail you have provided here and I really great to read this so many people asked me these types of questions but that was hard for me to answer everyone individually and now I can refer them to this blog post to know how they can file a Bankruptcy even if they have a small firm.

kids birthday parties link

9/21/2014 06:45:19 am

Fantastic article! I initially discovered your blog a few days ago, and I website the exact same day. I have a
number of cool thoughts for some future posts you could write. I'll shoot you an email later. Keep up the great
work.

http://www.brillassignment.co.uk/ link

10/18/2016 06:46:34 am

This is amazing help for my school business work, thank's it explains something better than my text book to be honest!

prepare yourself for college link

11/2/2016 10:56:20 pm

I have no idea that small business can file bankruptcy, and it can do so many things like this. But all the way it just shows the risk to the people who start this company.

bandar domino online indonesia link

6/12/2017 05:25:37 am

People from all races of life seem to participate in poker online. Let me tell you some obvious reasons why people are so much impressed with poker online.

specialty polymer coatings link

6/12/2017 03:40:54 pm

Polyvinyl chloride, more commonly known as PVC, is one of the most used plastics in the United States. It is used in construction because of its effectiveness over traditional materials such as copper, iron, or wood. With so much being used, PVC recycling is important, not only for industries to get rid of the PVC waste, but to purchase recycled PVC as well.

acrylic resins link

6/12/2017 04:05:55 pm

There are a number of coatings available in the market but metal coating is popular among them. There are some procedures used such as paints, powder coatings, Galvanization, electroplating etc.

personal injury lawyer new orleans louisiana link

6/18/2017 04:09:39 am

For many individuals and small businesses, looking for a personal injury lawyer is one of the most difficult and important decisions they make. You must determine whether your personal injury lawyer specializes in the type of injury claim you are pursuing. Experience is a plus for every lawyer, but specialized experience is highly important. The type of lawyer you need will often vary depending on the type of accident, for example, the litigation might require advanced knowledge of medical malpractice legal precedence, or the pursuit of a personal injury claim which will necessitate an experienced personal injury lawyer.

internet link

6/22/2017 02:12:49 pm

A good online presence not only marks the beginning of a brand's relationship with customers online, but also with the tough competitors as well. Whether you are a self-employed professional or running a company, if you want to connect with your audience, your customers, sell yourself or sell your services, you need an online platform. Having said that, a one page HTML page flooded with information on everything you do will not do you any favours.

Unternehmensberater link

6/23/2017 11:36:39 am

Business development is simply a broad term that is used in the process of reinforcing ties with existing customers/clients as well as luring clients in various areas of the consumer market. To accomplish this objective, professional development usually crosses conventional barriers between marketing, sales, operations, management and customer care in order to ensure that this process is promoted on more than one level. In order words, business development expert should be able to demonstrate a high degree of competence in a variety of areas in order to clearly spot and take advantage of growth opportunities.

buy perfectmoney link

7/4/2017 06:26:45 pm

Automatic exchangers PM e-Voucher USD to Perfect Money USD at good rates (Perfect Money toPerfect Money).

change my address online link

7/8/2017 04:55:51 am

Wonderful post!!! Genuinely loved this kind of post. Although I want much more information on like precious subject matter.

Domestic violence orange county ca link

8/20/2022 01:04:21 pm

In such a case, the owner may wish to consider filing for bankruptcy as well because, if the business gets rid of the debt by filing for bankruptcy, the creditor will try to collect payment from the business owner. Thank you, amazing post!

Child custody attorney orange county link

8/20/2022 01:22:53 pm

This means that the business owner individually and personally promises to pay business debt in the event that the business does not. Thank you for taking the time to write a great post!

Thomas Clarence link

1/13/2023 03:16:07 pm

It was interesting to me when you mentioned that sometimes business owners can sign a personal guarantee for debt when filing for bankruptcy. I would think that a business owner would want to consult with a lawyer before they make any bankruptcy decisions. Working with a lawyer might allow a business owner to save their company.

Braden Bills link

3/20/2023 09:47:15 am

My friend has been having debts rack up for his business. It makes sense that he might need to file for bankruptcy to get through things. I'll make sure that he knows that small businesses can file for bankruptcy.

Mia Evans link

7/20/2023 04:25:53 am

I find it interesting when you said that Chapter 7 bankruptcy would be erasing the debts you have but can end your business while Chapter 13 will not be available for incorporated entities. It seems that having a bankruptcy attorney is the best thing to have when you are not sure which action to go for. It's to ensure that you are making the best decision for yourself and your business and help you recover after some time.

Victoria Addington link

9/4/2023 01:08:56 pm

I was captivated when you mentioned that Chapter 7 bankruptcy ends the business while erasing most debt right away. My friend is having a hard time with their bankruptcy. I think it's time to turn to a bankruptcy lawyer for proper guidance.

Hailey Garcia

6/9/2024 02:49:06 pm

My name is Hailey Garcia and I am from New Jersey. My herpes virus turned to war after 2 years of living with it. I have tried different medical procedures to cure my herpes but to no avail. Most people think herpes is only a minor skin irritation of which herpes has long term effects on health and passes through the bloodstream and can be easily contracted through sexual intercourse. I knew I had herpes from the first day I started feeling itchy in my pubic area and the pain was very unbearable. I couldn't stand it anymore. After 2 years of trying other means to get rid of it, I had to contact Doctor Odunga to help me with a permanent cure. I saw his email and whats-app number from a testimony I read online from a lady who was also helped by him in curing infertility problems, I had faith and contacted him. He assured me of his work and I ordered his herbal medicine. Within 5 days, I didn't feel any pain anymore and within 2 weeks, my skin was all cleared and smooth. I am very grateful to you sir and I write this testimony as others have done to bring those having faith to you sir. If you have herpes or other similar disease and you want it cured, kindly contact Doctor Odunga, Whats-App (wa.me/+2348167159012) OR Email [email protected]

🛑 PERMANENT SOLUTION FOR TREATMENT, CURE & PREVENTION OF THE FOLLOWING :❗❗

🛑Kidney Failures
🛑 Osteoporosis
🛑 TB
🛑Sexual Dysfunction
🛑Period Pain
🛑 Dementia
🛑 Parkinson's
🛑Infertility
🛑ProstateEnlargement
🛑 Libido
🛑Fibroids/Cysts
🛑 Epilepsy
🛑Stroke
🛑Cancer
🛑 Burns
🛑HIV

Can a Small Business File for Bankruptcy?

Leave a Reply.

Author

Archives

Categories