Starting a small business can be risky. You have a fifty-fifty chance of surviving over a five year period. If you are one of the unlucky ones who is facing a mountain of debt without much hope of recouping your losses, you have some decisions to make. You might be able to sell off the real estate and then sell the personal property piecemeal. You could also consider a business bankruptcy TN owners have used to their advantage in the past. Your next decision is choosing either Chapter 7 or 13.
You may file chapter 7 personally or as the owner. If you are a sole proprietor, you will have to file as an individual because the IRS doesn't make a distinction between you and your company. A lot of owners file both ways. The discharge of business bankruptcies doesn't wipe out personal responsibility for company debts.
The advantage of Chapter 7 for sole proprietors is the ability to eliminate debt with one filing. They are allowed to exempt assets and can continue to operate their businesses. The advantage for a corporation, that wants out of a failing business, is the opportunity to walk away and let the trustee handle the liquidation of assets and repayment of creditors.
Corporations aren't allowed exemptions or continuation of a business in Chapter 7, and that can be a disadvantage for them. It won't help anyone who wants to eliminate personal debt. It can be helpful for partners who are no longer interested in the company and don't have personal responsibility for company debts. A company without many physical assets might be a good candidate for Chapter 7.
LLCs, partnerships, and corporations don't have the choice of filing Chapter 13 at all. It is reserved for sole proprietorships and individuals. It is possible for a sole proprietor to file personally and eliminate company and personal debts at one time.
If you want to keep your company operating, Chapter 13 may be the answer for you. With this filing, you get to keep your assets and repay your debts through a structured plan. With Chapter 7, sole proprietors who have a lot of company assets and not enough exemptions face having a trustee sell off part of their assets. This won't happen with a Chapter 13 filing. Even if you are running a company as a corporation, you can file Chapter 13 to eliminate your personal responsibility for company debts.
The drawback to Chapter 13 is that it's limited to individuals. Chapter 13 also takes longer to discharge. You may be making monthly payments for as long as five years before the process is complete. In order to retain non-exempt assets, you must repay unsecured creditors their face value.
Nobody wants to go bankrupt. It's a last resort for most. Before making such a drastic move, you should weigh your other options. If they fail, it is probably time to consider Chapter 7 or 13. Bankruptcies are matters of public record. The details of your case are available to creditors and employers. This is a decision that will have a long lasting effect on your reputation, your future, and your company's credibility.
You may file chapter 7 personally or as the owner. If you are a sole proprietor, you will have to file as an individual because the IRS doesn't make a distinction between you and your company. A lot of owners file both ways. The discharge of business bankruptcies doesn't wipe out personal responsibility for company debts.
The advantage of Chapter 7 for sole proprietors is the ability to eliminate debt with one filing. They are allowed to exempt assets and can continue to operate their businesses. The advantage for a corporation, that wants out of a failing business, is the opportunity to walk away and let the trustee handle the liquidation of assets and repayment of creditors.
Corporations aren't allowed exemptions or continuation of a business in Chapter 7, and that can be a disadvantage for them. It won't help anyone who wants to eliminate personal debt. It can be helpful for partners who are no longer interested in the company and don't have personal responsibility for company debts. A company without many physical assets might be a good candidate for Chapter 7.
LLCs, partnerships, and corporations don't have the choice of filing Chapter 13 at all. It is reserved for sole proprietorships and individuals. It is possible for a sole proprietor to file personally and eliminate company and personal debts at one time.
If you want to keep your company operating, Chapter 13 may be the answer for you. With this filing, you get to keep your assets and repay your debts through a structured plan. With Chapter 7, sole proprietors who have a lot of company assets and not enough exemptions face having a trustee sell off part of their assets. This won't happen with a Chapter 13 filing. Even if you are running a company as a corporation, you can file Chapter 13 to eliminate your personal responsibility for company debts.
The drawback to Chapter 13 is that it's limited to individuals. Chapter 13 also takes longer to discharge. You may be making monthly payments for as long as five years before the process is complete. In order to retain non-exempt assets, you must repay unsecured creditors their face value.
Nobody wants to go bankrupt. It's a last resort for most. Before making such a drastic move, you should weigh your other options. If they fail, it is probably time to consider Chapter 7 or 13. Bankruptcies are matters of public record. The details of your case are available to creditors and employers. This is a decision that will have a long lasting effect on your reputation, your future, and your company's credibility.
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