Filing for a Chapter 7 Bankruptcy as a Business Owner
If you own an LLC or a corporation, and are thinking about filing for bankruptcy, you may have some questions or concerns regarding whether your business debt will be discharged in a Chapter 7 bankruptcy. By owning an LLC or a corporation, you probably have business debt and personal debt. Business debt is debt that arises from the operation of your business. It is money that you owe from running your business. It is debt that is owed by the business entity, which is separate from the debt owed by you as the owner of the business. Personal debts from running a business can come in the form of taking out loans and incurring credit card debt to pay business expenses. It can also come about when you as the business owner, agree to “personally guarantee” a business loan, which means that you as the owner, agree to be personally responsible for repaying the business loan, in the event the business is unable to pay the loan itself.
It is possible to continue operating your LLC or corporation after filing a Chapter 7 bankruptcy, so long as the business entity continues to meet its obligations to creditors and customers. Filing a personal Chapter 7 bankruptcy ensures that you are not personally liable for paying the business’s debts. Whether the business can continue to operate after filing a personal Chapter 7 bankruptcy, can be a bit complicated and depends on the nature of the business. For instance, if you own a business that offers a service, as opposed to the sale of goods, then it is more likely that your business will be able to survive the personal Chapter 7 bankruptcy and continue its operations after the bankruptcy. If you own a business that sells goods, determining the outcome of the business is a little more complicated, because there are more factors involved, such as vendors. If you are seeking to file a personal Chapter 7 bankruptcy, it would be helpful to consult with an experienced bankruptcy attorney.
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The bankruptcy attorney will advise you on the impact of a Chapter 7 bankruptcy on your business, and will advise you on whether it is possible for the business to continue its operations after filing the personal Chapter 7 bankruptcy. See us at LifeBackLaw.com!
