Small business bankruptcy law is complicated and it takes an experienced attorney who is focused on the bankruptcy practice to succesfully remove your debts.
Small business can get deeply in debt for a number of reasons that are frequently beyond the control of the owner - such as higher insurance costs, loss of suppliers or a major client, decreased marked demand, illness of the owner and more.
Here at Maydanik Law Firm, we have consulted and represented many small business owners in San Jose and throughout the Bay Area who were looking for a fresh financial start. To help you make the best decision and jump start your financial recovery with minimal risk, our small business bankruptcy attorney will meet with you in person for an hour and will analyze your financial situation, goals and debt resolution options in detail. This initial consultation is free of charge and does not obligate you to hire us or file bankruptcy.
Your options are most affected by the kind of business ownership you have (sole proprietorship, partnership, corporation), whether you want to keep and continue operating the business, and the value of your assets and income.
If you have a sole proprietorship, it means that the business and you are the same legal entity. If you have a corporation, the business and you are separate legal entities. Depending on your situation, this can work for you or against you.
For example, if you are a sole proprietor, it means that all the debts incurred by the business are your personal debts and can get cleared through your bankruptcy case; as a downside, any assets owned by the business are, in a nutshell, your assets and may be up for grabs if the creditors get any compensation through your case. If your business is a corporation, the corporate assets normally have more protection but as a downside, you cannot clear debts of the operating corporation through your personal bankruptcy case.
Whether you want to keep and operating the business is also very important. If the business is at a stage where you just want to close it down, then you may have more bankruptcy options available – it may be safe to file either Chapter 7 (which is a liquidation type of bankruptcy) or Chapter 13 (which is personal financial reorganization). If you want to keep operating the business, in many cases Chapter 7 is not a good idea because Chapter 7 trustee can liquidate any non-exempt business assets and can order you to stop operating the business.
Also, no matter what your goals are, timing makes a big difference in achieving the best results. For example, if you have a corporation which is losing money and which you want to close down, it’s sometimes to your advantage to dissolve it first, and then file a personal bankruptcy case so that any potential debts and liabilities are covered by your case. As another example, if you think you will have a big tax debt, it may make sense to wait to file the case after taxes for the current year become due, so that you are able to resolve this debt through the case.
The value of your business assets and income also matter. The higher the value of your assets and income, the more likely it will be that your best option, to clear the debt at as a low cost and low risk as possible, would be financial reorganization through Chapter 13 or 11, and not liquidation through Chapter 7.
When you own a small business and are having financial hardship, careful approach and detailed advice from an experienced attorney are crucial. You can either lose the business in bankruptcy, if you rush or don’t have proper representation, or you can rebuild the business, revitalize your finances and clear the business debts with proper advice and representation.
We analyze your business and personal situation in fine detail while evaluating your case and offering our recommendations. Our goal is to find a way to resolve your debts in the most efficient, safe and cost-effective way possible. Contact our San Jose bankruptcy attorney today to schedule a free consultation.