Tavere

Free Case Evaluation

510-255-4646
  • Home
  • About Firm
  • Practice Areas
  • Testimonials
  • Attorney
  • Blog
    • Chapter 7 Bankruptcy
    • General Bankruptcy
    • Chapter 13 Bankruptcy
    • Bankruptcy Law
    • Bankruptcy News
    • Types of Debt in Bankruptcy
      • Bay Area Bankruptcy Attorney
  • Contact Us
Stop Worrying About Your Debt

A Better Tomorrow

Starting Today

Stop Worrying About your Debt.
Call us Now to Take the First Step.

Click Here
Millions in debt discharged for our clients

Real Concern

Real Help

Millions in debt Discharged
For our Clients. Call Today, let us Help!

Click Here

Questions Small Business Owners Should Ask Before Filing for Bankruptcy

Admin on June 30, 2020 Posted in Blog, General Bankruptcy

No business owner wants to file for bankruptcy. If you have to engage in this process, however, there are some critical pieces of information that you should know. Understand that in the right cases, bankruptcy can be invaluable. An experienced business bankruptcy lawyer can help you determine whether bankruptcy is the best option for your business. The following are some key questions to ask if you are a small business owner considering filing for bankruptcy.

Are There Different Types of Bankruptcy?

Bankruptcy refers to a federal legal process that allows individuals and businesses to erase debt or restructure based on the surrounding financial circumstances and the type of bankruptcy that is filed. There are three common types of bankruptcy filings including Chapter 7, Chapter 11, and Chapter 13. Chapter 7 wipes out all unsecured debt, which includes things like credit cards. For business without a lot of debt and not much income, Chapter 7 can be the best possible option. For businesses, Chapter 7 is also referred to as liquidation because a bankruptcy trustee closes the business and liquidates the business’s assets to pay as many debts as possible. Chapter 13 is a bankruptcy option for people who cannot file Chapter 7. This type of bankruptcy involves a restructuring plan wherein only part of a debt is repaid over a several-year period. Chapter 11 is referred to as reorganization and utilized for corporations.

What is the Best Bankruptcy Option for You?

If your business has not yet incorporated, you are personally liable for all of the business’ debts. As a result, it is often best in these situations to file for Chapter 7 or Chapter 13 bankruptcy. Chapter 7 is often a wise choice for sole proprietors and freelancers who are underwater and whose businesses are not separate from the individual. Chapter 13 is a good option for corporations that generate income but are not making enough to cover their expenses. In Chapter 13, the business and its creditors agree on a plan for reorganization and repayment.

How Much Property Will You Lose by Filing for Bankruptcy

Bankruptcy might be governed by federal law, but each state has its own laws of “exemptions” that address how much property a person can retain during the process.

Do Business Owners Face Any Downsides to Filing for Bankruptcy

Many business owners are worried about the stigma associated with filing for bankruptcy. In reality, this stigma is much less impactful than it once was. Some of the challenges presented by the bankruptcy process are that you and the business will fall under the scrutiny of a trustee, the bankruptcy does not always erase all debts, and bankruptcy recordings that stay on a person’s credit report for 10 years.

How Much Does Bankruptcy Cost?

There are two primary costs involved with bankruptcy — the fee to file with the court and attorney fees. While Chapter 7 is often the least expensive type of bankruptcy to file, Chapter 11 is the most expensive type of bankruptcy. Your attorney can provide you with a better understanding of how much more the process will cost.

Can You Pursue Bankruptcy On Your Own?

When many people learn about the potential for attorney’s fees, they attempt to navigate matters on their own. In reality, there is too much at stake to not retain the assistance of an experienced bankruptcy lawyer. There are too many things that could go wrong if you make a mistake. Additionally, in most cases, it will be impossible to assess whether you made a mistake until it is far too late. 

Other Critical Questions Small Business Owners Should Ask Before Filing

There are many varying reports about how well businesses will weather the long-term impact of the COVID-19 pandemic. Some people predict that many small businesses will simply not be able to survive this life-changing series of events. If you have begun to consider the bankruptcy process, there are some critical questions that you should ask yourself besides the issues that are already discussed. Some of the questions that you should consider before filing for any type of bankruptcy include:

  • Determine how your business is structured. If the business is an LLC, then it will likely be essential to pursue corporate bankruptcy. If the business is a sole proprietorship, however, it might be possible to pursue a bankruptcy as a lone individual, which means substantially lower filing fees.
  • If the nondischargeable personal debts like sales tax are not paid before closing, the chances are good these debts might require the owner to later file for personal bankruptcy. Debts that are personally guaranteed will also likely follow the filer if not promptly paid off in the beginning.
  • If there have been inappropriate distributions from a business that have prejudiced creditors from receiving their share, you should appreciate that Chapter 7 trustees will not delay to sue the owner of a business to recover anything that was disproportionately disposed of by a company for personal experiences.
  • Make sure that the company’s books and records are in good order. Properly maintaining this paperwork is appropriate so a Bankruptcy Trustee can review the finances of the business. Not having adequate company records can even lead to the bankruptcy case being dismissed.
  • Whether the business is salvageable through debt reorganization. If debt reorganization is a possibility, it might be a critical step to review the terms of Chapter 11 or Subchapter 5 Small Business Bankruptcy. 

How well the bankruptcy process is navigated and whether you do a good job at gathering all of the essential paperwork, bankruptcy can be a life-saving remedy for a failed business. If bankruptcy is not taken seriously enough and you fail to gather the required details, bankruptcy can be an unfortunate and ill-time process that can sometimes make your financial situation even more challenging. One of the best ways to make sure that your bankruptcy case resolves in the best possible manner is to retain the assistance of a competent, dedicated, and engaged lawyer. 

Speak With a Knowledgeable Bankruptcy Lawyer

If you need the assistance of an experienced bankruptcy attorney, do not hesitate to contact The Law Offices of Melanie Tavare by calling (510) 255 – 4646.

Recent Posts

  • What Can You Do if You Cannot Keep Up With Chapter 13 Bankruptcy Plan Payments?

    If you filed for Chapter 13 bankruptcy but are struggling to keep up with the payments outlined in your debt repayment plan, you may not kn

    category : Bankruptcy Law, Blog

  • What is a Means Test and How Does it Work?

    When considering filing for bankruptcy, one of the most important steps is the means test. This test evaluates your financial situation to

    category : Bankruptcy Law, Blog

  • When Should I Stop Using My Credit Card Before Bankruptcy?

    Filing for bankruptcy is a difficult decision and one that should not be taken lightly. But if you have already made the decision to file,

    category : Bankruptcy Law, Blog

  • Can Filing for Bankruptcy Stop an Eviction?

    Facing eviction can be a stressful and difficult experience. If you are considering filing for bankruptcy to stop an eviction, there are ce

    category : Bankruptcy Law, Blog

search this year

  • February 2023
  • January 2023
  • Search by Year

  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2014
  • 2013
  • 2012
  • img

    Quick Links

    • Bay Area Bankruptcy Attorney
    • About Firm
    • Practice Areas
    • Attorney
    • Communities Served
    • FAQ
    • Disclaimer
    • Contact Us

    Follow Us

    • Facebook
    • Twitter
    • Google
    • Yelp

    Contact Us

    • Oakland Office

      1300 Clay St. Suite 600
      Oakland, CA 94612

    • Hayward Office

      24301 Southland Dr.
      STE. 310
      Hayward, CA 94545

    • 510 255 4646

    We serve the following localities: Alameda County, Alameda, Berkeley, Castro Valley, Fremont, Hayward, Livermore, Oakland, San Leandro, Union City, Contra Costa County, Antioch, Brentwood, Concord, Martinez, Pittsburg, Richmond, Walnut Creek, San Francisco County, San Francisco, Albany, Ashland, Dublin, Emeryville, Newark, Pleasanton, San Lorenzo, and Alamo.


    The Law Offices of Melanie Tavare is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code


    |

    2022 © Copyright law office of Melanie Tavare