Small business owners qualify for chapter 7 bankruptcy
Small business owners qualify for chapter 7 bankruptcy. The Coronavirus aftermath is destroying small businesses. The small business debt is typically debt which has been co-signed by the business owner. That makes the owner liable. The creditors will look to collect from the business owners which means dealing with creditors, lawsuits, wage garnishment, judgments, liens, and seizure of personal assets. Small business bankruptcy.
Here is what a small business owner needs to know: When they have more business debt, than consumer debt, they can be exempt from a chapter 7 bankruptcy’s rigorous MEANS TEST.
Why? Because if most of their debt was tied up in the business, they are only subject a more flexible and forgiving budget test.
If consumer debt exceeds business debt, filing for personal bankruptcy mandates an analysis of whether one is subject to and/or passes the MEANS TEST. The small business owner can BYPASS the MEANS TEST where the BUSINESS debt exceeds the consumer debt.
If the business owner’s disposable income is BELOW a certain amount, they CAN file a chapter 7 bankruptcy and receive a discharge.
If the business owner’s disposable income is ABOVE a certain amount, they CANNOT file a chapter 7 bankruptcy. However, they could look at a chapter 13 or chapter 11 for debt relief via these other bankruptcy chapters.
Many small businesses are shut down already. The value (and sale marketability) of the business is probably zero. The owner may have zero income or reduced income. Now is a GREAT time to evaluate if a chapter 7 bankruptcy is the solution to the co-signing problem. Small business bankruptcy.
Contact our law firm for an immediate and candid opinion on if this is a solution for your co-signed debt problem.
If you are considering a bankruptcy, CLICK HERE to read a book which discusses “things to think about” when going through the bankruptcy decision making process.
If you’ve made the decision to file a bankruptcy, CLICK HERE to read a book which discusses how to file a bankruptcy.