Your small business represents the culmination of hard work, innovation, and your hopes for a bright future. Unfortunately, taking this risk to make it on your own can come with hiccups. In fact, many small business owners find themselves struggling with debt as part of their journey toward independence and success. At Levitt & Slafkes, P.C., we celebrate sole proprietorships and take pride in helping small business owners obtain much needed debt relief.
Protecting Your Assets
A sole proprietorship is a small business that is legally indistinguishable from its owner. In other words, if you started your own business and did not formally create a corporation or limited liability company, then you are personally liable for debts accrued by the business. In plain English, this means that your personal property and assets are fair game to debtors who want to sue you. So if your business debts become insurmountable, it is in your personal interest to contact a bankruptcy attorney to weigh your options.
The idea of bankruptcy relief is to put you in a position to move forward into your financial future. In fact, seeking bankruptcy relief before creditors can obtain court orders against you can really limit your exposure and create predictability for you. Thus, protecting your personal assets is therefore an absolutely essential element of any debt relief plan.
Chapter 7 Bankruptcy
Under Chapter 7, a debtor can obtain bankruptcy relief in as little as three months. This means that unsecured debts to vendors or suppliers and credit card debt are all subject to discharge. This may be a desirable option for sole proprietorships looking for a quick relief to their debt struggles. However, Chapter 7 also involves the debtor relinquishing all non-exempt assets to the trustee to sell and pay off creditors. In essence, if your business assets and inventory do not fall under a state or federal exemption, your business is at the fate of the trustee. This option makes a lot of sense if you plan to shut down your business and move forward to your next venture. An experienced bankruptcy attorney can help you take full advantage of your available exemptions under state or federal law.
Chapter 13 Bankruptcy
Chapter 13 takes longer than Chapter 7, but may offer more flexibility to a sole proprietorship that wants to continue operating. Under Chapter 13, a debtor enters into a repayment plan with creditors over the course of several years. Upon completion of this plan, all eligible debts are wiped out. Chapter 13 proceedings also stay creditors from coming after you so long as you make timely payments. And significantly, you get to retain your assets and inventory under Chapter 13, which will allow you to keep your business running while also protecting your assets.
Chapter 11 Bankruptcy
In those situations where a sole proprietor cannot or should not file a Chapter 7 or Chapter 13 bankruptcy, a Chapter 11 reorganization may also be an option.
Let Levitt & Slafkes, P.C. Work For You
If you own a sole proprietorship and need help in closing or staying afloat through bankruptcy, contact Levitt & Slafkes, P.C. Your business is an important part of your life and making the rights decisions at this moment can help set you up for future success. We understand this and will give you and your business the attention and respect you deserve. Let us help you move forward. Contact Levitt & Slafkes, P.C., at (973) 323-2953 today, or reach us online to schedule a free consultation.
We are proudly designated as a debt relief agency by an Act of Congress. We have proudly assisted consumers in filing for Bankruptcy Relief for over 30 years.