Small Business Bankruptcy Lawyer in Riverside Serving the Inland Empire and Southern California
If your small business has 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. You are personally liable for all business debts if your business a general partnership or sole proprietorship, meaning you are doing business under a trade name. 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. If you want to obtain relief under the bankruptcy code in relation to those debts, it may be appropriate to file a bankruptcy on behalf of the business entity, which can be done under Chapter 7 or Chapter 11.
Chapter 7 Business Bankruptcy Attorney in Riverside
Often the most favorable form of bankruptcy for a business owner is Chapter 7 bankruptcy. Chapter 7 helps those of modest means who, after paying their monthly living expenses, have no money left to repay debts. While Chapter 7 bankruptcy does not enable you to restructure secured debt, catch up on past-due payments, or taxes, there is no repayment plan and your personal liability on most credit card debt is discharged, providing you with a clean slate.
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
Chapter 13 bankruptcy is an option for people to block foreclosures and vehicle repossessions, stop wage garnishments and IRS levies, and reduce and restructure their debts. Under this bill consolidation approach, debts are repaid over three to five years, enabling you to catch up on house payments, child support, taxes, and other debts.
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.