Protecting yourself when it’s time to throw in the towel

Protecting yourself when it's time to close your businessYour business is struggling. You’re working countless hours and facing unmanageable debt.

You’re ready to throw in the towel but you’re concerned about personal damage control.

How can you shut down your business without being pulled down with it?

Let me assure you, it can be done. While your situation seems bleak on the surface, you have bankruptcy options.

  1. You can file a no-asset chapter 7 case;
  2. You can file chapter 7 and liquidate non-exempt assets; or
  3. You can file chapter 13 and enter into a plan to repay your creditors.

1. Filing a no-asset chapter 7 for a fast fresh start

If everything you own fits within the allowed asset exemptions, your case will likely be simple and quick. A no-asset chapter 7 bankruptcy usually takes 3 to 4 months before a discharge is ordered. If none of your assets are within the reach of the trustee, there is nothing to liquidate and distribute among your creditors. The distribution process can take years to complete, so avoiding that streamlines the case a great deal.

But this assumes that all of your debts can be handled appropriately in a chapter 7. The debts that you want to write off would be discharged, leaving only those that you’re willing and able to pay. This may include secured debts like vehicle loans and mortgages, certain taxes, alimony and child support payments, and student loans.

2. Filing chapter 7 bankruptcy to liquidate business assets

If you own property that’s not exempt from liquidation, chapter 7 may still be a viable option. If you can manage without those assets or want to rid yourself of them (i.e. remnants of a former business), allowing the bankruptcy trustee to liquidate may be a sensible and fair way of putting the past behind you. This is especially helpful if you have debts that you want the trustee to pay out of the proceeds.

You can’t predict with certainty how a trustee will act or how much (if any) would trickle down to your creditors, but this is something to keep in mind when considering this option.

3. Filing chapter 13 to deal with leftovers

Though you’d prefer putting your closed business behind you quickly, you may be in a situation that chapter 7 cannot handle adequately.

If the business left you with substantial tax debts that cannot be discharged, non-exempt assets you must protect, or a significant mortgage arrearage, chapter 13 may be the better option for you. This type of bankruptcy could save you thousands of dollars and help you deal with creditors you can’t seem to shake.

Request a consultation

Deciding between chapter 7 and 13 bankruptcy is where you truly benefit from having access to an experienced attorney.

Before you file that bankruptcy petition, schedule a consultation with Real World Law to discuss all debt relief options that are available. You can reach our firm at 302.225.8340 or use this form to email us.

Glenn A. Brown, Esq.

Attorney Glenn Brown and the Real World Law team provides legal protection to homeowners and businesses in eminent domain and condemnation actions, commercial and residential real estate closings, and other litigation matters. If you're a property owner in need of legal protection, contact our law firm. We've two convenient office locations, serving communities in and around Upper Darby, PA and Wilmington, DE.

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