Can I Include Business Debts in Consumer Bankruptcy?

Sadly, you may find yourself in a dire financial state affecting your personal life and business operations alike. With this, you may wonder whether you should undergo consumer or business bankruptcy proceedings. And if you ultimately choose a consumer bankruptcy petition, you may further question whether you can also discharge your business debts at this time. Follow along to find out whether you can incorporate your business debts into your consumer bankruptcy and how a proficient Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can help determine whether you should file in the first place.

Why should I file for consumer bankruptcy instead of business bankruptcy?

If your consumer debts weigh you down more than your business debts, you may be better suited for a Chapter 7 or Chapter 13 consumer bankruptcy filing. With this, the Kentucky bankruptcy court may not interfere with your business operations or seize its assets. In turn, you may keep your business’s doors open, retain your employees, and run operations as usual.

That said, you may opt for a Chapter 7 consumer bankruptcy filing if you anticipate your business closing or it is in the process of shutting down. This is because, here, you may liquidate your assets to pay off your debts and ultimately wipe out your personal guarantees for business debt. On the other hand, you may be more inclined to pursue a Chapter 13 consumer bankruptcy filing if your business still standing at the end of these proceedings. This is because, here, you may incorporate your business debts into your court-ordered repayment plan.

Can I include my business debts in my consumer bankruptcy filing?

To reiterate, you may possibly include your business debts in your Chapter 13 consumer bankruptcy filing. However, this is so long as you are the sole proprietor of your business. After all, your consumer and business debts may be the same in the eyes of the Kentucky bankruptcy court.

In other words, this does not apply if you are a shareholder of a partnership, limited liability company, or corporation. This is because the debts of your fellow shareholders cannot get intertwined with yours. In this case, your fellow shareholders of your partnership or limited liability company may ask you to sell your shares to ensure they do not get tied up in your consumer bankruptcy proceedings. Contrastingly, your consumer bankruptcy proceedings may not affect your corporation, as this business type keeps its shareholders independent from its management.

With all things considered, if you are a sole proprietor with a regular income, you may include your business’s priority debts in your repayment plan and pay a minimal amount on your business debts not secured by collateral. At the end of these proceedings, you may discharge your eligible business debts.

In conclusion, there is no time like the present to kickstart your bankruptcy petition. So, at your earliest possible convenience, please get in touch with a talented Louisville, Kentucky consumer bankruptcy lawyer from Schwartz Bankruptcy Law Center.