Chapter 13 Bankruptcy Lawyer in Memphis, TN
The way that personal bankruptcy affects your business depends on the type of company you run. Some business types, such as corporations and LLCs, offer limited liability to business owners. This means that you are not personally responsible for debts incurred by the business. By the same token, the opposite is also true, and your business is not responsible for your personal debts.
However, if you are involved in a general partnership or a sole proprietorship, you are personally liable for your business debts, and filing for bankruptcy may affect your business and possibly close it down all together. Because the stakes are so high, you should consider all your options before deciding to file for bankruptcy.
Depending on your situation, there may be options available to you to help you avoid bankruptcy:
- Debt consolidation
- Credit counseling
- Debt settlement
- Asset liquidation
Each option has advantages and disadvantages. Debt consolidation is only available in the early stages while your credit is still relatively good. Credit counseling may be helpful at reducing monthly payments and/or interest rates, but it is not a quick fix. Settling your debt to pay off a smaller amount can have a negative impact on your credit score. Asset liquidation means selling off property to obtain money to pay the debt, and it may be a good option for a last resort if you happen to have assets you don’t need.
Filing for Bankruptcy
Bankruptcy should be only a last resort when other options have failed, but in some cases, it may be the only alternative. The types of bankruptcy available to you again depend on the type of business you run. If you run a corporation or an LLC, you can file business bankruptcy under either Chapter 11 or Chapter 7. If you run a sole proprietorship or are one of two or more general partners, Chapter 11 may still be an option available to you. Otherwise, you will probably need to file personal bankruptcy under Chapter 7 or Chapter 13 with a chapter 13 bankruptcy lawyer in Memphis, TN.
As you can see, Chapter 7 bankruptcy is available to both businesses and individuals. The value of filing for Chapter 7 is limited for an LLC or a corporation, so it is not a very commonly used option. Chapter 7 tends to be more valuable for individuals who have their debts discharged as a result, but the downside for sole proprietors is that filing Chapter 7 is likely to close the business.
Contact Darrell Castle & Associates for their insight into bankruptcy law and business owners.