Running a business can be a rewarding career for many people – for many others, it can be nothing but a nightmare with bankruptcy their only escape. With over 70% of new businesses failing within the first two years, the chances of success for most new businesses is limited from day one. If you’re in a failing business and looking for relief from your debt through bankruptcy, I suggest you contact a lawyer first since some filings can be quite complicated.

If you’re a sole proprietor of business, your filing for bankruptcy can be achieved without a lot of pain. A business that is run as a sole proprietorship is not considered a legal entity, therefore the business itself cannot be declared bankrupt. In this situation, the sole proprietor, or owner, must personally apply for bankruptcy. If your business is failing and you have no other income then should pass the means test for a Chapter 7 filing.

As we mentioned in the past, a Chapter 7 filing will see all your non-exempt assets seized and sold and the money used to repay credits. Once all your assets have been sold and the creditors paid, the remainder of the debt is discharged (wiped) leaving you to rebuild your life.

If you do not qualify for a Chapter 7 filing, you can file under either a Chapter 11 or Chapter 13 petition. This will involve the debtor entering into a scheme of arrangements to repay as much of the debt as possible over a given time frame.

Sole proprietors, although running a business, are still considered to be individuals and not a business when it comes to bankruptcy. See a lawyer before seeking bankruptcy – they can ensure your application is made through the most appropriate Chapter and that your rights are protected.

Related posts:

  1. Bankruptcy For Small Business
  2. Bankruptcy Provisions For Business