When you decided to start your small business, you never considered you would have to file for bankruptcy relief. We know. Although bankruptcy is a difficult decision for any small business owner, it may be a necessary option for your financial situation.
Chapter 7 of the US Bankruptcy Code offers bankruptcy protection to small business owners facing bankruptcy. If you are a business owner of a failed business, and you’re looking to cut your losses, you may be eligible to file for chapter 7 bankruptcy relief.
Under chapter 7 bankruptcy, the small business owner can discharge his or her’s unsecured personal and business debts. The small business would have to surrender its current assets that exceed the exemption level established by the state in which they operate. Any non-exempt assets of the small business are then sold and the proceeds are used to repay the business’ creditors.
The state in which you file bankruptcy will determine which assets, if any, are considered exempt under chapter 7 bankruptcy. The more common bankruptcy exemptions are owner-occupied homes that fall under the homestead exemption, personal belongings, and retirement accounts.
Most states offer generous bankruptcy exemptions. This encourages more individuals to venture into small businesses without fear of no protection should they sustain an irreparable blow to their business. This also means that lenders in those high exemptions states, are less eager to offer small busiess loans to entrepreneurs.
If you are considering filing Chapter 7, 11 or 13 Bankruptcy, do not hesitate to consult with an experienced bankruptcy attorney. Contact Real World Law, PC to schedule a consultation with Philadelphia Solo Bankruptcy Lawyer, Dr. Glenn A. Brown.