If you are involved in the operation of a small business and things are not going very well financially, you may have questions about the potential benefits of bankruptcy. We provide this type of assistance to people in Tacoma, Tri-Cities, and Vancouver, Washington. Our firm also has offices in many different locations throughout the state of Oregon, including Portland, Eugene, and Medford. We have successfully counseled countless small business people over the years, and we are often asked many of the same questions. In this blog post, we will take a look at a few of them so that you have a basic foundation of information to draw from going forward.
Am I personally responsible for debts that have been incurred by my business?
The answer to this question depends upon the business structure that you are utilizing. If you are the sole proprietor of your business, you would in fact be held personally liable for the business debts. The same thing is true if you are a general partner in a partnership. On the other hand, if your business is a limited liability company, a corporation, or a limited partnership, generally speaking, you would not be personally responsible.
What types of bankruptcies are available to small business people?
There are three types of bankruptcies that are often used: Chapter 7, Chapter 13, and Chapter 11. Chapter 12 bankruptcy is also a possibility, but it is only available to family fishing businesses and family farmers.
What kind of bankruptcy should I file if I want to shut down my small business?
In many cases, a Chapter 7 will be the most efficient and effective choice under these circumstances. This is a liquidation bankruptcy that is available to limited liability companies, corporations, and partnerships. If your business qualifies and you file for a Chapter 7 bankruptcy, the bankruptcy trustee would liquidate the business property to pay back as much as possible, and the business would not be responsible for any debt that may remain.
You can also use a Chapter 7 bankruptcy if you are a sole proprietor, but it would be personal bankruptcy that encompasses your business debts.
Schedule a Small Business Bankruptcy Consultation
Now that you understand a few of the basics, you may be ready to take the next step. If you would like to schedule a free case evaluation, give us a call at 1-800-682-9568.