Twin Cities Bankruptcy Lawyers Fighting For You
People don’t like the idea of bankruptcy. It is something that many people fear having to claim, especially if they have a small business, own their own home, etc. Owning a small business and needing to file bankruptcy is a scary situation.
In reality, filing bankruptcy usually fixes the problems that come from a business that isn’t making money. It allows you to either restructure the debts to make the business profitable, or to exit the business completely with much of your savings (and your sanity!) intact. Bankruptcy is a legal process created by Congress to help people get a financial fresh start. It allows a new beginning when a business is not making money.
One of the main questions people want to be answered when they contact Walker & Walker Law Offices is whether they should file for personal or business bankruptcy.
How Do You Know When to File Personal Vs. Business Bankruptcy?
This is not a question that is easily answered. There are several variables involved with it and everyone has to decide for themselves when it may be time to file. For instance:
- Are you in debt because of personal expenses or business expenses?
- Is your personal debt causing your new business to suffer?
- If you subtract start-up bills from the equation, is your business making at least some money for your future?
Your best option, before you make any final decisions is to speak with your lawyer. They will be able to help you decide whether personal or business bankruptcy is best for your situation. In many cases, it is better to file for personal as a way to protect your business.
How Personal Bankruptcy Protects You
When you file personal, you have the option to list your business as an asset and make it so that it is exempt from future collection attempts. This includes giving you the ability to keep:
- Farm Animals (if necessary for business or income)
- Any Tools-of-Trade You Require to Run Your Business
These types of things are protected in bankruptcy. By filing a personal claim, you are saying you have nothing for bill collectors to take, and they will be forced to leave you alone regarding the debts you currently owe.
In short, by filing for personal bankruptcy, your business debts are erased, you owe nothing toward your debts, and your business is protected because you claimed it as exempt. You are free to rebuild using the income from your business and move forward with your life.
Why Business Bankruptcy Could be a Bad Choice
One of the biggest reasons you should avoid choosing to file a business bankruptcy is that most likely you signed a “personal guarantee” with the lending agent. This means if your business files bankruptcy, you are still going to be held accountable for the debts that you owe. They will expect you to pay 100% of the money if for some reason your business fails.
Failure to pay could mean that the creditors are able to levy your bank account or wages to try and satisfy the debt. This could put you further in the hole than when you opted to file bankruptcy.
When Business Bankruptcy May Be Best
If you started your business without signing a personal guarantee, then you are not responsible for the debt. Creditors would simply be unable to collect unless the business starts making money again.
The only time you may want to consider filing business bankruptcy is if the business itself is losing so much money that it is pushing you further into debt. By filing bankruptcy on it, admitting it is insolvent, you are giving up the business. When you do this, that business will no longer be yours to run.
Discuss Your Options with a Lawyer
The government protects small business owners and entrepreneurs. Bankruptcy protects you with an automatic stay. To take advantage of it, if you are suffering through financial troubles, you have to understand which laws will protect you the most.
You can be free of all personal liability for the debts that you are owed, and still protect your financial future. In Minnesota, you do not ever have to feel that you have no options.
Walker & Walker Law Offices specializes in all types of personal or business bankruptcy claims. If you are ready to take control of your situation, contact us. We are here for you and never charge for first time consultations.