Even though owning a small business has a lot of advantages, there are also a lot of risks as well. Simply put, employees of major firms or government agencies have a much higher level of job security than small business owners. According to a practiced Orange County bankruptcy lawyer, at times, small business owners find themselves giving up their personal finances for the requirements of the company, investing an increasing amount of their resources there instead, or taking home such meager salaries that they must incur debt to meet their basic demands.
Does this sound familiar? You might be worried about how the business you have worked so hard to develop would be impacted if you have to file for personal bankruptcy because of severe debt. The kind of business you are incorporated under and the sort of bankruptcy you choose to file will both have an impact on the way your bankruptcy is seen. Read on to learn more and then contact The Law Offices of Sood and Sood for help.
- Solo Entrepreneurship
If your company is a sole proprietorship, the law actually views your personal and corporate assets as belonging to the same entity. Every professional business bankruptcy attorney in Orange County suggests that, in effect, your personal bankruptcy will even lead to the bankruptcy of your small firm.
The assets of your company will most likely be liquidated as part of your bankruptcy if you file for Chapter 7 bankruptcy. However, you might be able to maintain your assets or use any exclusions to your advantage. For the reason that the bankruptcy trustee will not allow you to incur any new obligations while the bankruptcy process is ongoing, you frequently wind up having to stop operating your business under Chapter 7 bankruptcy.
If you would like to keep your firm open, mull over filing Chapter 13 bankruptcy. Even though it provides you with more options for what property you can keep for your business and personal use than Chapter 7, it does not discharge all of your unsecured debts.
- General Partnership
You are in a similar scenario to having a sole proprietorship if you jointly own a business with one or more co-owners in a general partnership since you are personally accountable for business debts and those debts will be included in your personal bankruptcy.
However, according to specialized Riverside bankruptcy lawyers, if you file Chapter 7, no exemptions will be available for commercial property owned in a general partnership. If your partner can’t purchase your portion of the company, it will most likely have to shut down. A Chapter 13 filing might allow the company to continue operating.
Your company is regarded as a separate entity and should not be impacted by your personal bankruptcy if you have incorporated it as a corporation or a limited liability partnership. The sole exception would be any personal loans you obtained in your own name and applied to the company. You are liable for these loans, and your bankruptcy will include them.
Let us take a quick look at some of the myths regarding bankruptcy that every person should be aware of.
- Filing for bankruptcy will harm your credit
It is likely that your credit is already quite bad by the time your bills turn out to be so bad that you are thinking of declaring bankruptcy. Contrary to what you might believe, bankruptcy can really lay a solid foundation for quickly repairing your damaged credit.
- Immoral people file for bankruptcy
Taking use of a legal option that will provide you with debt relief is not immoral, even if you should strive to faithfully repay all of your bills.
- Prior to submitting, you ought to pay off your car loan
In reality, you can typically keep your car during a bankruptcy case, and the bank lien on it will avert the bankruptcy trustee from taking it.
A professional lawyer can help if you are facing any of the issues mentioned above
You can always count on getting in touch with Sunita Sood, specialist bankruptcy attorney in San Bernardino, at The Law Offices of Sood and Sood right away if you would like to understand more about your choices for considering bankruptcy!