Bankruptcy When You Own A Business
If you work for yourself or even own a home-based part-time business, filing bankruptcy is a very different proposition than if you simply work for wages. When you own a business, bankruptcy is more complicated than when you file as an individual. In addition, businesses tend to have more creditors than individuals, although this is not always the case.
Three Types of Bankruptcy, Two Situations
There are three types of bankruptcy commonly filed by individuals and businesses: Chapter 7, or liquidation; Chapter 13, or reorganization; and Chapter 11 or business bankruptcy. The type you choose depends on your needs and your status as an individual or a company. If you are interested in discharging debts and do not care about keeping assets or do not have any assets, a Chapter 7 can work for both individuals and businesses. If you want to keep some of your assets, you may need to file a Chapter 13 as an individual or a Chapter 11 as a business. You must decide if you are going to file bankruptcy as an individual, as a business, or as both together. That will depend on how your business is structured and if you have incorporated. You can choose the type of bankruptcy you want to file in some cases. However, you must meet the requirements of each type of bankruptcy in order to file under that chapter. Chapter 7 has no minimum income requirements. You can file Chapter 7 if:
- You pass the means test given your income as an individual or a business.
- You do not have sufficient assets to pay off your debts.
- You have not received a bankruptcy discharge in the past seven years.
- You have not had a bankruptcy case dismissed in the past 180 days.
Both Chapter 11 and Chapter 13 have minimum income requirements and require the debtor to make a plan to repay as much debt as possible. In order to file Chapter 11 or Chapter 13, you must:
- Earn a minimum amount of income.
- Have less than the maximum amount of debt.
- Be current on your income tax filings.
The Oswalt Law Group can help you file bankruptcy whether you choose Chapter 7, Chapter 13 or even Chapter 11. Our attorneys have years of experience in filing bankruptcies of all types and guiding both individuals and business owners through the process of successfully taking a bankruptcy from initial filing to discharge.