I have a small business and run it as a sole proprietorship. I have debt for the business. Can I file
bankruptcy on the business debt and not for myself?
No. A sole-proprietorship essentially means that you are the business. You file taxes as a self-employed individual but do not have a separate legal entity like a corporation set up for your business. It is common for people to operate businesses as sole-proprietorships. You may have incurred debt that directly relates to your business such as leases, credit cards, vendors, bank loans, equipment loans, and tax debt. You do have personal liability on the debt even though it was for a business purpose. Filing for bankruptcy as an individual will help you to reorganize or eliminate this business debt while still maintaining some of your personal debt, like your home mortgage. Depending on the type and amount of debt, the bankruptcy may be filed as a “business case” meaning that the majority of your debts are not consumer debts. Filing bankruptcy does not mean that you will lose your business, either. You may still be able to operate and maintain control of your business assets and accounts while you are in bankruptcy. Every business is different. Bankruptcy can be a useful tool in helping your business to survive in a difficult economy.
Please call my office for an appointment to discuss your options in managing your business debt.