Filing for business bankruptcy can be confusing to say the least. It can come with emotional stress and legal complications that you will most likely want to avoid as much as possible. Regardless of whether you have owed the business for 30 years or 30 days, there are legal procedures you will need to complete. The first question you will need to answer is this – what type of business do you have? There are four main types of businesses as follows:

• Sole proprietorship/ individual business
• Corporation
• Joint venture
• Partnership

Business Bankruptcy for Individual Business Owners

If you currently own the business by yourself, or if your business is a husband and wife venture, then you will need to file for Chapter 7, Chapter 13 or Chapter 11 bankruptcy, depending on your situation. There is no difference between the business and your personal assets; however, there are different roads to take when it comes to filing for sole proprietorship bankruptcy which is why it is important to discuss your options with a lawyer.

Business Bankruptcy for Corporations

Corporations and partnership businesses have two options when it comes to filing for bankruptcy: Chapter 7 or Chapter 11. So which one is right for you?

Chapter 7 business bankruptcy – if you plan on dissolving the business completely and want to stop operation, then Chapter 7 is the right choice. Chapter 7 bankruptcy will liquidate all your assets. Keep in mind that Chapter 7 business bankruptcy does not mean your debts will be completely discharged.

Chapter 11 business bankruptcy- if you want to remain in business and simply reorganize the debt, then Chapter 11 is the better alternative.

Partnership and Bankruptcy

If you own a business with a partner, then you will need to consider how this bankruptcy will affect the partnership. Under a general business partnership, all partners will be liable for the debts. However, in a limited partnership, the partners have limited liability in regards to the debt. There are a number of complications surrounding business partnership and bankruptcies which is why it is important to sit down with a Minneapolis bankruptcy attorney to discuss your options and what this will mean for not only your business, but also your partnership.

Is Business Bankruptcy the Right Option?

Regardless of what type of bankruptcy you will need to file, it is important to weigh your options to determine if bankruptcy is your best choice. Below are some of the reasons and benefits to filing for bankruptcy if your business is in trouble:

• Bankruptcy will stop the creditors from harassing you and your workers. Furthermore, Chapter 7 bankruptcy will stop future creditors from filing a lawsuit against the corporation. It will inform them that the business is no longer operating.
• If there are assets to be liquidated, it allows for an independent trustee to sell the assets and pay the creditors whatever is received.
• It allows the corporation’s officers to move on with their lives

Keep in mind that, when it comes to business bankruptcy, there are a lot of ‘if’s’, ‘ands’ or ‘buts’, especially surrounding LLC and corporation partnerships. Filing for a Chapter 7 or Chapter 11 bankruptcy does not eliminate the personal obligations of the corporation’s officers.

To schedule a free consultation to discuss bankruptcy with one of our Minneapolis bankruptcy attorneys, please contact Heimerl, & Lammers, LLC.

Heimerl & Lammers practices in all eighty seven counties of Minnesota including, Hennepin County, Ramsey County, Scott County, Carver County, Washington County, Anoka County, Wright County, Sherburne County, Chisago County, Isanti County, Stearns County, Dakota County, Cass County, Blue Earth County, Olmsted County, Sibley County and St. Louis County.

We represent Minnesota Bankruptcy Law clients throughout the Twin Cities including Minneapolis, Champlin, Brooklyn Park, Brooklyn Center, Eden Prairie, Edina, Excelsior, Hopkins, Long Lake, Lino Lakes, Maple Plain, Minnetonka, Monticello, Mound, Osseo, Otsego, Rogers, Saint Bonifacius, Saint Paul, St Paul, Spring Park, St Louis Park, Wayzata, Woodbury, White Bear Lake, Plymouth, Maple Grove, Eagan, Eden Prairie, Burnsville, Bloomington, Buffalo and throughout Minnesota.

Disclaimer: We are a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code.