Since small business bankruptcy is often linked to personal assets, people who are not earning profits while facing a lot of bills feel more challenged than others. The good news is that for small businesses, there is an exemption for tools of the trade in Georgia. However, if your assets exceed that value, you will have to pay the excess to keep your equipment. More Information >>>
The Difference Between Personal and Business Bankruptcy
If your small business is drowning in debt, you can file for Chapters 7, 11, 12, or 13 bankruptcy. However, before you decide on the type of bankruptcy, you need to obtain small business bankruptcy information to clearly understand if you should file for business or personal bankruptcy.
You should file for personal bankruptcy if you are liable for your assets and equipment. Therefore, if your business is structured as a general or sole proprietorship, you are personally liable for the debt. The vast majority of small business owners choose Chapter 7 or 13 to file for personal bankruptcy, but a Chapter 11 in rare circumstances may be an option.
If your business is structured as an LLC or a corporation, your business may be solely responsible for the debt and not you. You should file for bankruptcy on the behalf of your business and can do so under Chapters 7 and 11. Chapter 13 is not suitable for business bankruptcy, as only individuals may file this kind of bankruptcy case.
Chapter 7 Bankruptcy
This form of bankruptcy is perfect for sole proprietorships and usually used when an owner has no hope of reorganizing the business. With this chapter a trustee will sell all business assets, including the client list and all money will go toward paying debts. All unpaid debts that are left after the liquidation are forgiven and the business no longer exists.
While Chapter 7 often means the end of the business, sometimes it can also be used to get one more chance to reorganize the business. If nobody buys the business assets and the trustee is not interested in the assets, a business owner can buy the assets back usually at a discounted value. Many small-business owners choose this type of bankruptcy because other options are more expensive.
Chapter 11 Bankruptcy
This type of bankruptcy is often used by bigger companies that need a lot of time to reorganize their business. It is the best for those who are confident they can develop a reorganization plan to help recover their company. However, if you use this method, your business will operate under increased scrutiny for a certain period of time.
Chapter 11 bankruptcy is more expensive than the previous one, but you also have more opportunity to recover than with Chapter 7. The waiting period here is four months, which is often enough to develop a reorganization plan.
Chapter 13 Bankruptcy for Business Owners
This type of bankruptcy is often used by individuals, who for purposes of this article would also be business owners. A chapter 13 involves the formation of a repayment plan showing how debts will be paid back in full or as a percentage (and not in full). This form of bankruptcy can help you avoid losing your home or other personal assets if your personal assets are intertwined with company assets.
Where are Business Bankruptcy Cases Filed
All Atlanta and Metro-Atlanta area cases are filed in Federal Bankruptcy Court in the Northern District of Georgia. There are four (4) divisions these cases are filed, and the county your business is located will determine which division your case if filed. For example, if your business is located in Fulton, Gwinnett, Cobb, DeKalb, Chrokee or several other counties, your case will be filed in the Atlanta division. However, if your business is located in Forsyth or Hall county, your case will be filed in the Gainesville division. More Information >>>
For a confidential, personal consultation on how our experienced business bankruptcy attorneys can help you make the best small-business bankruptcy decision, feel free to contact us now. We can be reached at 770-609-1247.
