Most people know business bankruptcy affects your business. But what about business owners who need to file for personal bankruptcy?
There are several ways that filing for personal bankruptcy can affect your business. If you are a sole proprietor, your personal and business finances are intermingled, so a personal bankruptcy filing can have ripple effects on your business.
Most small business owners worry that if they file for Chapter 7 bankruptcy, they’ll have to give up all their business assets. However, this isn’t necessarily the case.
Under bankruptcy law, certain types of assets are exempt from liquidation. This means that you can keep these assets even if you file for Chapter 7 bankruptcy.
Some of the most common exempt assets include:
- Your home
- Your car
- Household goods and furniture (up to a certain value)
- Tools of the trade (e.g., tools you need for your job)
- Retirement accounts
- Life insurance policies
In addition, if your business is a sole proprietorship, you may be able to exempt all or part of the business’s assets. This means that you may be able to keep your business running even after filing for Chapter 7 bankruptcy.
Of course, every situation is different and it’s important to talk to an experienced bankruptcy attorney to find out what assets you can exempt in your case. But don’t assume that you’ll have to give up everything just because you’re filing for bankruptcy. There’s a good chance that you’ll be able to keep some of your most important assets.
Many people who file for Chapter 7 bankruptcy can get business loans after their bankruptcy has been discharged. However, there are a few things to keep in mind.
First, you will need to have re-established your credit after your bankruptcy. This means making all of your payments on time and keeping your balances low. You may also need to provide collateral for the loan.
Second, the interest rates on business loans for people who have filed for Chapter 7 bankruptcy may be higher than the rates for people with good credit. This is because lenders view you as a higher risk.
Finally, you will need to have a solid business plan in place. Lenders will want to see that you have a clear idea of how you are going to use the loan and that you have a plan for repaying it.
You may have to disclose your bankruptcy status to business partners, suppliers, and customers.
If you’ve filed for personal Chapter 7 bankruptcy, you may be wondering if you need to disclose this information to your business partners, suppliers, and customers. The answer is generally no, but there are some exceptions.
For the most part, your bankruptcy will be a matter of public record. However, some business arrangements may require you to disclose your bankruptcy status, such as banks and other financial institutions.
If you’re concerned about how your bankruptcy will affect your business, it’s a good idea to speak with an experienced bankruptcy attorney. They can help you understand the laws and regulations related to bankruptcy and your business.
To learn more, contact the Law Offices of Robert M. Geller at 813-254-5696 to schedule a free consultation.