Filing for Bankruptcy if You Have a Sole ProprietorshipDallas Legal News
To understand how to file for bankruptcy as a sole proprietorship, you must first understand what it means to own this type of business. These types of businesses are one-owner businesses or those that are owned by a married couple and do not own a business, such as a limited liability company. What happens if you are thinking about business bankruptcy and have one of these businesses?
When you are considering bankruptcy, there is nothing separating a sole proprietorship from its owner, because you, as the individual, are also the owner of the company, and you are one and the same. This means that if you owe debts as either, you will be targeted by creditors in the way that they could come after your personal assets, such as your home, car, or money that you owe.
If you own a sole proprietorship, you have two different options for moving forward with bankruptcy: Chapter 7 and Chapter 13. We will take a look at both so you might be able to determine which option is best for you based on the circumstances of your case.
Options for Bankruptcy: Chapter 7 and Chapter 13
Chapter 7: If you own a sole proprietorship and you are considering bankruptcy to pay off your debts, Chapter 7 bankruptcy might be your best option. However, this means that you will have to give up any property that you own that is not exempt under state laws. Some debtors will make aspects exempt that are especially important to your life, such as your home, vehicle, furniture, clothing, and anything else that is seen as essential or a necessity. Most of the property that you own, you will find, is not exempt, which means that you could easily lose it.
Chapter 7 is meant to be a somewhat simple process, though it can still cause a lot of stress. From the moment you file your paperwork and get started, it will typically be about six months until your case receives a discharge and you are able to wipe out any of your debts.
Chapter 13: Chapter 13 bankruptcy is a lot different because you will not have to give up any property. However, you must be prepared to agree to a three-year or five-year repayment plan to pay off the debts in some way. If you are successful in doing this, you will be able to wipe out your debts and move forward.
Which Bankruptcy Option is Best for a Sole Proprietorship?
Now that you have looked into both Chapter 7 and Chapter 13 bankruptcy options for your sole proprietorship, you might wonder which option is best for you. You have to weigh the good with the bad. For instance, Chapter 7 might help you gain a solution the fastest but you might risk having your business shut down throughout the duration of the bankruptcy case due to the fact that they do not want you to rack up any additional debt. With Chapter 13, you might find that you have to cut back on certain aspects so that you can meet the repayment of your past debts. No matter what you choose, you will have to make good decisions if you want to keep your business.
Speaking with a Skilled Bankruptcy Attorney
At MJ Watson & Associates, our skilled bankruptcy attorneys understand how difficult it can be to face the fact that you will have to move forward with Chapter 7 bankruptcy or another type of bankruptcy in order to keep your business or pay off debts that you owe. Our skilled and experienced Texas bankruptcy attorneys are here to listen to you every step of the way, answering every question you have and helping you gain results. Please contact us at (214) 965-8240 to find out what we can do for you.