Owning a small business can be an exciting time for an individual, however, it can also cause much more financial stress on you to succeed. In the event that your business is not bringing in the funds that it should, you may begin to start moving your way into debt, and before you know it, paying back your creditors seems like impossibility. If you find yourself in this place, the option of bankruptcy is available to you for your business, either by filing for personal or business bankruptcy or both. Here you will have the option to either reorganize your debt into more manageable payments, removing at least your own personal liability from the debt of your business, or by liquidating the company in order to pay everything off. Depending on your current situation, with the help of a skilled San Diego bankruptcy lawyer, you will be able to begin your way out of small business debt!
A common question when addressing the topic of business debt is this: who is liable? Unfortunately, starting your own business means that you are putting yourself on the line, so whether you are a sharing ownership with a partner, or you are the sole proprietor, the debt of the company personally weighs on your shoulders, at least in some way. Which Chapter you will file for entirely depends on your preference and the specific situation you are in; this is why having a San Diego debt lawyer on your side is so helpful. At the San Diego Legal Pros law office, we are committing to helping each of our clients manage their debt and file for bankruptcy.
Under Chapter 7 bankruptcy, if you have a partnership, you own a corporation or LLC (aka business entity), then you have the option to choose this category. Essentially, this is the option for those companies that are buried very deep in debt, and closing the business and liquidating the assets are really the only option. However, what makes this different than a personal bankruptcy is that a business does not qualify for bankruptcy exemptions, everything must go. If you are the sole proprietor for your business, filing personal chapter 7 may be an option for you, because you will need to file under personal rather than business because the debt is completely your responsibility. However, under this option you may choose to continue running your small business after your bankruptcy process is complete.
If you're a business entity, you do not have the option to file for a Chapter 13 bankruptcy; however as a sole proprietor you do so that you will no longer be personally liable for the debt of your business. Lastly there is Chapter 11 bankruptcy; which is essentially known as being the reorganization option for businesses. Companies who hope to continue functioning while at the same time making payments that are more reasonable for their debt, will often times choose this option. However, it is important to know that Chapter 11 is often times more expensive and complex that filing for a Chapter 13 debt reorganization plan. What is unique, also, about this option is the fact that creditors will often have to be much more involved in the process, including voting on your bankruptcy plan before allowing you to move forward with the debt reorganization.
Fortunately for small business owners, if your debt falls under a certain number than the process with the creditors is often times much faster than when compared to a multi-billion dollar corporation. Please contact San Diego Legal Pros today for the San Diego Legal Pros that you deserve on your side!