You may be struggling with personal debts that require you to file for consumer bankruptcy, either Chapter 7 or Chapter 13 bankruptcy. And even though this has to do with your personal financial situation, it may impact your business, along with your partners and shareholders. Read on to discover how a bankruptcy filing might affect your business partners and how a seasoned Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can work to shield them.
Will a Chapter 7 bankruptcy filing affect my business partners?
Essentially, how your Chapter 7 bankruptcy may affect your business partners and shareholders is contingent on which type of business you are invested in. More specific examples are as follows:
- If you are invested in a partnership: your bankruptcy trustee may take the profits you personally earned during your bankruptcy proceedings to pay off your creditors; this may not affect your business partners.
- If you are invested in a corporation: your bankruptcy trustee may apply your share of the corporation to pay off your creditors; this may not affect your business shareholders.
- If you are the majority owner of a corporation: your bankruptcy trustee may take control of your share and possibly vote to liquidate your corporation’s assets entirely to pay off your creditors; this may affect your business shareholders.
It is worth mentioning that, if you are invested in a partnership, you should first look at the agreement you signed. This is because there may be a buy/sell clause that requires you to sell your interest before submitting a bankruptcy petition.
Will a Chapter 13 bankruptcy filing impact my shareholders?
You must understand that you may only be eligible to file for Chapter 13 bankruptcy if you are the owner of a sole proprietorship. In other words, you likely cannot choose this consumer bankruptcy option if you have business partners or shareholders.
But if you are a sole proprietor, then you may want to strongly consider Chapter 13 bankruptcy. With this, you may be allowed to incorporate both your business debts and personal debts in your bankruptcy proceedings. All the while, you may keep your business assets, along with keeping your business running. This is because you are simply restructuring your debts in a more manageable way.
We understand just how complex a bankruptcy filing may be when there is a business investment in the equation. This is why we recommend that you speak to a proficient bankruptcy lawyer before making any drastic decisions. Perhaps a lawyer may tell you that a bankruptcy filing is not necessary in the first place.
At any rate, you cannot ignore your crippling financial situation for much longer. Instead, you must retain the services of a competent Louisville, Kentucky consumer bankruptcy lawyer from Schwartz Bankruptcy Law Center today.