If your small businesses run into financial difficulty you may be thinking of just closing the doors and letting the chips fall where they may. There are resources that are available to you and a Chapter 7 bankruptcy may be the solution. It all depends on the type of business that you have and what your liability is.
If you have a general partnership or are a sole proprietor then you are personally responsible for the debts of your business. This is where the Chapter 7 bankruptcy can be of assistance as it can help to get rid of the majority if not all of your debts that you are personally liable for through your business. If your business happens to be a Corporation or LLC, the government looks at this as a separate entity and you still may be able to use the Chapter 7 bankruptcy to file but the debts are looked at differently.
No matter whether you are a single owner of the business a partnership or a corporation it is always advisable to utilize a Kentucky bankruptcy attorney to assist you with your bankruptcy proceedings. Your business may have got to the point where there are collection activities taking place against it. As soon as you file for your Chapter 7 bankruptcy an automatic stay will take place and a will put all of these collection actions on hold.
It will be determined throughout the course of your bankruptcy if you have any assets that can be sold off to pay your creditors and these have to be nonexempt assets, and these are determined by a specific list of exemptions that are either state or federal.
As a sole proprietor all of your business debts are considered as personal debts in the Chapter 7 bankruptcy. It is a little bit different when it comes to a partnership that is going bankrupt. If there are not enough assets in the business to pay off all of the creditors then the creditors have the option to go after the personal assets of the partners if they were personally liable for the debt. If it turns out that you are responsible for the partnership debts then you may have to file the Chapter 7 personal bankruptcy to get rid of your responsibilities.