Business Debt Bankruptcy Attorneys in Springfield, MO
As a business owner, we know your passion is unmatched. Whether you’re the owner of a sole proprietorship or you’re a partner in a multi-member LLC, you dedicate a significant amount of energy and time working to make your business successful. Unfortunately, in such uncertain times, it’s even more difficult to succeed. As a result, businesses may acquire more debt overtime to keep their doors open. At this point, you might be wondering if filing for personal bankruptcy might help ease the pressure of those mounting debts. At Reynolds & Gold Law, we’re here to help you assess your options to make the best decision possible for you, your family, and your business.
Schedule Free Consultation
With experienced bankruptcy attorneys like Jon Gold on staff, we feel we’re uniquely equipped to help business owners throughout Springfield and Southwest Missouri through the bankruptcy process. Contact us today to schedule a free consultation. During the initial consultation, we’ll discuss your business debts to understand better what the best course of action may be for you.
Can You Discharge Business Debts in Bankruptcy?
When filing for Chapter 7 bankruptcy, business owners are allowed to discharge certain unsecured debts. You can discharge the following debts:
- Credit card debt
- Lawsuit judgments
- Unsecured debts to suppliers, professional service companies like accounting firms, and more (Sole proprietors)
- Equipment and property leases (Sole proprietors)
- Personal loans and promissory notes
For sole proprietors, filing for Chapter 7 bankruptcy can be extremely helpful as you seek to cancel some of your business debt.
Are You Personally Responsible for Business Debt?
Depending on the type of business you own, you could be personally responsible for paying back certain business debts. For example, if you’re the sole proprietor of a small, local business, your responsibilities may significantly differ from someone associated with a limited liability company or a corporation. With all that said, let’s discuss the different types of businesses and how that may affect what type of bankruptcy makes the most sense for each.
For sole proprietors, in essence, you are your business. As a result, you will be held personally liable for any business debts you’ve acquired over time. That being said, if you choose to file for Chapter 7 bankruptcy, there is an opportunity to discharge some of that debt and keep your business open. Additionally, during the bankruptcy process, you may be eligible for property exemptions that protect certain assets from being sold to pay back the debt. However, there’s still a chance you may be required, by the bankruptcy court, to sell certain property or even the business itself to pay back certain debts.
Because a sole proprietor isn’t a separate legal entity from their business, you can file for Chapter 13 bankruptcy, which allows you to create a court-approved repayment plan for all of your for your debts that provides flexibility.
Corporations & LLCs
If your corporation or limited liability company has too much debt and cannot continue to operate, Chapter 7 bankruptcy is an effective way to wind down the company and bring it to closure.
If you’re a business owner associated with a corporation or LLC and you’ve signed a personal guarantee, you may be personally liable for business debts. In this case, it may be helpful for you to file for Chapter 7 or Chapter 13 bankruptcy to help discharge or restructure the debt you’re responsible for. Unless you’ve signed a personal guarantee, bankruptcy shouldn’t affect your personal credit in this scenario.
When partnerships choose to file for Chapter 7 bankruptcy, business debts cannot be discharged. In fact, the trustee will promptly close the business and liquidate all of its assets to pay any outstanding debts to creditors. In a partnership, each partner is personally liable for any business’s debt if that debt cannot be covered by selling the business’ assets. In most cases, partners will file for Chapter 7 bankruptcy individually to discharge the debt they’re responsible for. Because partners are liable for business debts, filing for bankruptcy can have a significant effect on each partners credit score.