Business declare Bankruptcy
Federal bankruptcy laws are designed to help debt – burdened individuals and businesses get a fresh start. You declare bankruptcy by filing papers in a bankruptcy court. Your creditors are immediately barred from trying to collect what you owe them. So, at least temporarily, creditors, even the IRS, cannot legally empty you bank account, repossess your property, or cut off your utility services. However, with court approval, certain creditors may be entitled to repossess your property or resume their collection efforts.
If you own your business as a sole proprietor, you’ll need to declare personal bankruptcy. Your personal debts as well as your business debts can be discharged – that is, wiped out –through the bankruptcy process.
If your business is a partnership or corporation, the business itself can go bankrupt. You won’t need to declare personal bankruptcy, however, unless you have business-related debts for which you’re personally responsible.
Depending on your particular circumstances, you may have a number of different bankruptcy options available.
Most small business owners opt to either:
- Lose some of their personal or business assets and cancel their debts, or
- Arrange to make payments on past bills from future income while keeping current on new bills and retaining their property. In many cases, past bills may be paid off at a fraction of their face value.
If you are thinking about filing for bankruptcy, you’ll need to research your options. Your options will be affected by issues such as:
- The dollar amount of your debt
- Whether you want to keep operating the business
- Your personal liability—for example, you may have pledged your home or cash for a loan, and
- The type of property you own; some of your personal property is yours to keep, regardless of your bankruptcy.