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Chapter 7 Bankrtupcy for Businesses


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2/27/2012
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If you are considering filing for bankruptcy for a business there are
a number of options available to you.  First you would need to
consider what type of liability you have.  If you are a sole
proprietor or a general partner you are personally responsible for the
debt.  If you are a limited partner, have an interest in a
corporation, or you have an interest in a limited liability company
you are generally not personally responsible for the debt.  However,
there can be exceptions to this where an individual has personally
guaranteed the debt of a company or the corporate veil can be pierced.
 Prior to filing for bankruptcy you will want to consult with the
attorney that handled the start up of your business.
Filling for a Chapter 7 differs, depending on the type of business you
have.  If you are a sole proprietor you cannot file for bankruptcy
solely for the business.  In this case you would need to file
personally and list the business.   This is because a sole
proprietorship is not a separate legal entity and is not considered
separate from you personally.  If, however, you have a partnership,
corporation, or limited liability corporation you may file on behalf
of the business and are not required to file for bankruptcy
personally.
If you have a sole proprietorship and are required to file personally,
both personal debts and business debts will be eliminated through
filling.  You can use exemptions available in personal bankruptcy
filings to exempt both personal and business property, though the same
limits and rules still apply.  The debt will be discharged and you can
still operate your business.  This is a very good option if you would
like to save your business.  Of course, if you do not want to continue
your business you may choose to surrender assets and begin winding up
your business.
If you have a partnership, corporation, or limited liability company
and file on behalf of your business filing for bankruptcy will
dissolve the business.  Upon filing you would need to begin winding up
affairs.  You could not enter into any new business, but could finish
existing obligations to the extent possible.  Assets would be
liquidated to pay off creditors.  The business debt is not discharged
and you cannot apply any exemptions that would be available in an
individual filing.  This would not eliminate any personal obligation
on debts incurred by making a personal guarantee of piercing the
corporate veil.  However, if you do have some personal obligation on
the business debts you can also file for a personal bankruptcy to
eliminate your obligation.

If you have any questions, or would like a free consultation with a
St. Louis Bankruptcy Attorney, contact us today!


Category: Bankruptcy


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