Bankruptcy for Small Businesses
Date Added: February 22, 2011
Author: Brian Reed
The entrepreneurial spirit is one of the touchstones of American culture that has made our country so strong. The willingness of driven individuals to step out and risk their financial stability for the sake of a business they believe in has been a catalyst of our country’s growth. However, a recent study by the University of Nevada shows that one in seven bankruptcies are filed by individuals tying to cope with the failure of a small business. While corporations or partnerships cannot file for bankruptcy, Chapter 7 and Chapter 13 are often used by entrepreneurs who are trying to deal with personal and business debt.
Since small businesses are unincorporated, they don’t have the same restrictions as larger corporations, which means that any business and personal debts are the responsibility of the business owner. So when a small business owner gets in over their head, the business doesn’t file for bankruptcy, rather the individual files. For small business owners who file for Chapter 7 bankruptcy, there are several protections which make it an attractive choice. If you are a sole proprietor, you operate your business by yourself so your business debts are also your personal debts, so they can be dismissed in a bankruptcy case.
There are several benefits for small business owners to file for bankruptcy. First of all, there is uniform protection in the United States on future assets, which offers a fresh start to the debtor. So, if you are a business owner who files for bankruptcy, you can start a new business or a new job without worrying about having future earnings seized to pay pre-bankruptcy debt.
Another important benefit for small business owners filing for Chapter 7 bankruptcy is exemptions. Exemptions vary from state to state and are set values above which debtors must surrender property. States with higher exemptions are more attractive to debtors because it protects more of their property. It is important to note that for small businesses filing for bankruptcy, the filer must also list all assets, both business and personal, which makes the exemption value of the state an important detail to know before filing. It can make the difference between keeping a home or having it liquidated.
If you are a small business owner who is seriously considering bankruptcy and you live in Los Angeles, you need to consult with an attorney who understands California bankruptcy laws. Not all bankruptcy attorneys are the same. While the process appears complicated, a Los Angeles bankruptcy attorney will be able to help you understand your options and avoid making bad decisions. You get one chance to file bankruptcy right the first time. The attorneys at Borowitz & Clark know what they’re doing, because bankruptcy is all they do. Unlike many firms, they never leave a paralegal or secretary in charge of a case. That’s why their cases succeed at such a high rate—even higher than many other bankruptcy firms. For a free consultation, contact a qualified Los Angeles bankruptcy attorney from BLC Law toll-free at 800-509-3200, or visit www.blclaw.com.
Brian Reed. los angeles bankruptcy attorney Contact the law office of Borowitz, Lozano & Clark, experienced bankruptcy attorneys who take your case from start to finish.