Chapter 7 Bankruptcy and Small Businesses
Just as individuals can find themselves in positions of serious financial distress in uncertain economic conditions, many small businesses are also vulnerable to overwhelming debt. The bankruptcy system is an excellent tool which can be applied to a variety of debt situations in order to resolve the issue in a manner which does not ruin the individuals involved, but instead allows them to start anew with a fresh financial slate. A small business can take advantage of the liquidation process involved in Chapter 7 bankruptcy to quickly and efficiently sell off its assets in order to pay creditors, relieving the stress of continuing to fight through debt collection efforts.
With assistance from the experienced Cedar Rapids bankruptcy attorneys at Hong Law, PLC, you will have access to the guidance and advice you need to most effectively use Chapter 7 bankruptcy as a tool to resolve your business’s debt issues. To learn more about your rights and options in bankruptcy court, call us today at (319) 294-5853.
Applying Chapter 7 Bankruptcy to Your Business
Depending on the type of business entity that your company is organized as, Chapter 7 bankruptcy can function in dramatically different ways. While individuals filing for Chapter 7 are typically seeking to discharge large amounts of debt, a business which applies for Chapter 7 is seeking the aid of the bankruptcy court in the effective liquidation of the company’s assets. The following are the more common types of small business Chapter 7 filings:
- Sole Proprietorship – A sole proprietorship is not an independent legal entity and, as such, cannot file for Chapter 7. The proprietor is directly responsible for all business debts and can, therefore, include these debts in a personal Chapter 7 filing.
- Partnerships – A business partnership may file for Chapter 7 as an entity, and the court will then close the business and liquidate its assets in order to pay its creditors. This often serves to prevent the individual partners from being personally liable for excessive business debt.
- Corporations and LLC – Corporations and LLCs may file for Chapter 7, but may not receive discharges. While individual parties are typically shielded from liability for business debts, Chapter 7 is a means of quickly and efficiently liquidating the assets of the business in order to pay off debts and dissolve the company.
At Hong Law, PLC, our legal team is dedicated to helping individuals and businesses manage their debt in an effective and timely manner. For a free consultation to learn more about how Chapter 7 may apply to you or your company’s financial issues, call an experienced Cedar Rapids bankruptcy lawyer today at (319) 294-5853.
Coralville, IA 52241
Phone: (319) 354-1804
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