Q: If I run my business as a sole proprietorship, do I have to file a personal bankruptcy?
A: Yes. In a sole proprietorship, you essentially are your business, so you are personally responsible for any debts the business incurs. However, whether your case would be filed as a “consumer bankruptcy” or a “business bankruptcy” depends on the specific nature of your debts. It is often possible to keep personal loans (such as a mortgage) while reorganizing or discharging your business’s loans; it may even be possible for you to continue owning and operating your business. During your initial consultation, we will carefully examine your financial situation, discuss the available options, and create a plan that will work best for you.
Q: Can I file for bankruptcy based on tax debts?
A: Although changes to the Bankruptcy Code passed in 2005 affected bankruptcies based on tax debts, you still have options. Small businesses commonly fall behind on paying self-employment and other taxes to the IRS, as well as state and local taxes. Some taxes, such as personal income taxes, may be dischargeable under bankruptcy if you meet certain conditions. However, the tax implications depend entirely on your circumstances. Contact The Vida Law Firm, PLLC today to schedule a consultation so that we can meet with you, go over your tax history, and explore the options that are available to you.
Q: If I file for bankruptcy, will I lose my business?
A: The future of your business depends entirely on your business’s financial situation and the nature of the debts you have incurred. Businesses can file either a Chapter 7 liquidation bankruptcy, or a Chapter 11 reorganization bankruptcy. If you file under Chapter 7, your business will most likely be liquidated and will indeed cease operations. However, under Chapter 11, you will likely retain control over your business while we work with you and your creditors on restructuring your debts and creating a repayment plan.
While bankruptcy can seem scary and intimidating, it can be a useful tool for helping a business through a financially difficult time. Our attorneys are dedicated to helping you through each step of this process; if your goal is to maintain control over your business, we will do everything we can to make that happen. To learn more about how we can help with your business’ financial issues, contact The Vida Law Firm, PLLC today.