Is Bankruptcy a Good Option For Small Business Owners In Tucson?
How Bankruptcy Will Affect Your Small Business
You likely opened your Tucson business as a way to gain some measure of financial freedom – possibly even to eventually grow your business into something large and wildly successful. But operating a business can be risky, and there are a lot of personal things that can happen to put a strain on your finances. Filing for either personal or business bankruptcy might provide some protection against the debts that you have accrued and to give you a fresh financial start.
However, bankruptcy can be tricky when it comes to small businesses. So much depends on what type of business you own, whether your business has the debts or you do personally, whether you want to protect business assets, and so on. It’s important that you consult with an experienced Tucson bankruptcy attorney to review your specific circumstances and finances to get tailored feedback about how bankruptcy can affect you. You may be able to use a creative strategy with bankruptcy to meet all your goals, but a Tucson bankruptcy lawyer will help you understand what’s possible.
Type of Business
Before you can know what type of bankruptcy you can (or should) file, you must first consider what type of business you own. For example, if you are an independent service provider, such as an accountant who works out of your home, you likely don’t have a lot of business assets. Therefore, you may be able to file Chapter 7 bankruptcy as an individual and have all your unsecured debts wiped out without impacting your business at all. Or you may be able to file Chapter 13 bankruptcy to reorganize your debts under a more affordable repayment plan.
Your bankruptcy attorney in Tucson will look at how much you make, as well as the value of your assets, to help you understand which chapter of bankruptcy will be better. You may make too much to qualify for Chapter 7 bankruptcy, or you may have secured debts that you can’t discharge in a Chapter 7.
Personal v. Business Bankruptcy
As a business owner, you could either file a personal bankruptcy or business bankruptcy, Chapter 11 or 12, depending on a number of circumstances. You’ll need to consider what type of debts you have, what type of assets you have, and what you want to accomplish. In some cases, your Tucson bankruptcy attorney may recommend that you file for both personal and business bankruptcy.
The rules are too complicated to enumerate here, but your bankruptcy lawyer in Tucson will help you understand all the ins and outs to determine which is the better chapter of bankruptcy to consider. Much will depend on the goals you have, such as whether you want to keep certain assets or you want to keep the business open. In some cases, it may be better for you to close the business and liquidate your assets. But your attorney will help you think through all these issues and develop the right strategy.
Type of Debts and Assets
Different chapters of bankruptcy deal with different types of debts. For example, Chapter 7 bankruptcy deals with unsecured debts like credit card balances and medical bills. Chapter 13 bankruptcy handles all types of debts, but it can include secured debts, like what you owe on your house or car, which a Chapter 7 bankruptcy will not.
When you are considering how bankruptcy will affect your small business, you need to think about what types of debts you have, both for yourself and for the business. You will also need to think of what type of assets you have. If you own a brick-and-mortar business with a lot of inventory or equipment, chances are good that many of those assets will be seized to pay your debts. However, you may be able to file for a type of bankruptcy that allows you to restructure your business or personal debt so that you can afford to pay it while also keeping your assets. Again, it is key to explore all these options with the help of an experienced bankruptcy attorney.
The Tucson bankruptcy attorneys at My AZ Lawyers can help you understand the best course of action with bankruptcy when you own a small business. We represent clients in both individual and business bankruptcy, and we can help you understand how to creatively use a bankruptcy filing to eliminate or better manage your debt while also preserving your assets, where possible. Call us in Tucson today to schedule a free consultation with a Tucson bankruptcy attorney and learn more.