Small Business Bankruptcy Lawyer in Riverside Serving the Inland Empire and Southern California
Today’s economy is difficult for both small businesses and families. If your small business is carrying too much debt, it is possible for you to file for Chapter 7 bankruptcy, Chapter 13 bankruptcy, Chapter 11 bankruptcy, or Chapter 11 Subchapter V (Subchapter 5) bankruptcy. To determine what type of bankruptcy to file, you will need to first determine if you should file a personal bankruptcy or a business bankruptcy.
If you are personally liable the business debts, it may be best to file a personal bankruptcy. In most cases, small business owners have personally guaranteed the debts of their businesses. We can put an end to the bleeding. Most small business owners who file for personal bankruptcy select Chapter 7 or Chapter 13, though sometimes Chapter 11 may be the best option, particularly under the new Small Business Chapter 11 laws, also known as a Subchapter V bankruptcy.
However, if your business is organized as a corporation or limited liability company (LLC), the business may be the only party responsible for paying business debts so long as you did not co-sign or sign a personal guarantee. Shareholders of a corporation typically have no personal liability for business debt. However, shareholders may also be held liable if a creditor can prove that some corporate formalities were not followed.
Chapter 7 Business Bankruptcy Attorney in Riverside
Most people seriously considering bankruptcy qualify for Chapter 7 straight bankruptcy by passing the means test without any trouble. However, for some people, especially those who formerly operated a business and now have higher than average income, this test can be difficult to pass. For these people, being able to avoid the means test can be very helpful, potentially saving tens of thousands of dollars. If assets are limited or exempt under the Bankruptcy Code, such as under California’s homestead exemption, you may pay nothing to creditors and keep all of your assets.
Business owners may also be entirely exempt from the means test required for consumer debtors so long as their debts are not primarily consumer debts. Consult a bankruptcy attorney experienced in business bankruptcies to understand if you may qualify for a Chapter 7 bankruptcy based on the business liabilities.
Chapter 13 Business Bankruptcy Lawyer in Riverside
many small businesses and sole proprietorships may have Chapter 13 bankruptcy available to them. Depending on how you have your business set up and how you conduct your business transactions, you may be able to discharge your business debt in a consumer bankruptcy.If you are a small business owner, you may want to factor in your business plans when deciding what type of bankruptcy to file. This means that mortgage arrears for the residence of the small business owner can be cured in a Chapter 13 small business bankruptcy.
However, only individuals are qualified to file a Chapter 13 bankruptcy. That means corporations, LLCs and other business entities are not able to seek relief under Chapter 13.
Chapter 11 Small Business Bankruptcy Attorney in Riverside
No Creditors’ Committee. In the ordinary Chapter 11 cases, a committee is appointed to represent unsecured creditors. That committee can retain attorneys and other professionals at the debtor’s expense, which can increase the cost of Chapter 11 reorganization. However, in a small business case, the bankruptcy court can issue and order that prevents a creditors’ committee from being appointed.
Additional Filing and Reporting Duties. There are additional reporting requirements for small businesses not found in other Chapter 11 cases. Specifically, a small business debtor must attach the most recently prepared balance sheet, cash flow statement, statement of operations, and federal tax return to the Chapter 11 bankruptcy petition.
Plan Deadline. While ordinary Chapter 11 cases have no deadline for a plan or reorganization unless set by the court, in small business cases, however, the debtor has only 300 days to propose a Chapter 11 plan. This deadline can be extended if the debtor proves the ability to obtain approval of a plan within a reasonable period of time.
No Disclosure Statement. In ordinary Chapter 11 cases, the debtor must prepare a disclosure statement and file it with the bankruptcy court for approval, along with circulating copies to creditors and other parties. Those disclosures must provide extensive information about the debtor and proposed plan. However, the new laws allow for the bankruptcy court to waive the disclosure statement requirement in small business cases. This can reduce legal and other costs.
Contact a Business Bankruptcy Attorney in Riverside Today
When you are in dire financial straits, you need a business bankruptcy attorney who knows the law, knows the system and knows you. Talkov Law has helped individuals, families and businesses suffering from excessive debt. Call Talkov Law today at (951) 888-3300 or contact us online for a free analysis of your situation.