Does a Personal Bankruptcy Filing in NV Affect Business Assets?
What Happens To Your Business If You File For Personal Bankruptcy?
Even if your business is doing well, you might have some personal financial struggles. Perhaps you or a family member became ill, or perhaps you had to deal with a series of financial setbacks, like your spouse losing their job or the house needing major repairs. You may be considering filing for bankruptcy to deal with your personal finances, but you may be concerned about how that will impact your business, which you will need to rely on for your future financial health.
The best thing you can do is talk to an experienced bankruptcy attorney about your concerns and get a thorough review of your finances for tailored feedback. However, here is some general information about how bankruptcy can affect your business assets to help you in that conversation:
If you own a sole proprietorship, you are at greater risk of having your business assets seized to satisfy your debtors. However, whether the bankruptcy trustee takes any interest in your business assets depends entirely on what type of business you run and what its finances look like. For example, if you are a freelancer who works from home and doesn’t have any assets like specialty equipment, chances are that there is nothing for the trustee to consider, other than your regular wages. If you own a business that includes property, equipment or assets, those could be taken.
Know that your wages or commissions will always be included in the bankruptcy estate. Depending on what type of business you own, it may need to be closed during the bankruptcy proceedings until the trustee can decide on what will be included in the bankruptcy estate.
Partnership and LLC
If you are in business with other people, either through a partnership or an LLC, your share of the business will be considered in your bankruptcy filing. The bankruptcy trustee or one of your creditors may seek a charging order that gives them control over your financial interest, thereby giving them the profits or interest you would have received. This order does not give them the right to manage the business or to vote.
It is important that you review the terms of your partnership or LLC before filing for bankruptcy. There may be a provision in your agreement that requires you to sell your interest in the business or otherwise terminate your ownership before you file for bankruptcy so as not to put the business in jeopardy.
If you own a corporation, or if you have the majority interest in an LLC, the bankruptcy trustee can liquidate the business by taking over authority from you or by using your majority position to vote for a sale. The proceeds would then be used to satisfy your creditors.
Sale and liquidation are not the only options. The bankruptcy trustee will first assess the business to determine if such an action would be financially worthwhile. The trustee will weigh the costs of selling the business against the profits to be made and the debts that will be satisfied. In many cases, businesses also have enough debt that selling them off wouldn’t result in enough profit to be worth the time for a bankruptcy trustee.
Every business will be handled differently in a bankruptcy case, and there are many different circumstances that can change the determination of the bankruptcy trustee. It is always best to consult with an experienced bankruptcy attorney to explore your specific questions about your business in depth. Your attorney will help you understand what to expect and will counsel you on exemptions and other options to protect your business while still getting the debt relief that you need.
The bankruptcy attorneys at Zero Down Bankruptcy Lawyers of Reno are ready to help you get relief from overwhelming debt through bankruptcy protection. We represent clients in both Chapter 7 bankruptcy and Chapter 13 bankruptcy. We also handle emergency bankruptcy filings. We’ll help you understand which would help you get the maximum bankruptcy protection, as well as explain your options for protecting your business or other assets. Call us in Reno today to schedule a free consultation with an experienced bankruptcy lawyer and learn more.
Zero Down Bankruptcy Lawyers Of Reno