Your Business Assets During Personal Bankruptcy in NY

sad businessman is sitting on red armchair

Deciding to file for bankruptcy, whether it be personal or business – is a tough decision.

How can you regain control of your financial situation? Can you do this and keep as much property as possible as well?

Ursulova Law can answer your pressing questions. Contact them today.

Personal Bankruptcy and Business

If you’re a business owner but need to file for personal bankruptcy, it’s understandable why you hesitate. Your business is important to you reason for you to know what happens to it once you file for Chapter 7 personal bankruptcy.

Will Personal Bankruptcy Affect your Business Assets?

Sometimes, business owners who file for personal bankruptcy affect their businesses leading to their closure. Whether this happens to you, such a situation depends on what type of business entity you own.

It’s recommended you consult with an experienced bankruptcy lawyer in Brooklyn. Your Brooklyn bankruptcy attorney will ensure you’re knowledgeable about the effects of personal bankruptcy on your business assets.

Determinants of whether you can keep your business or not in filing for bankruptcy:

  • If your company has liability insurance
  • Your ability to sell some of the property or the business as a whole

Effects of Bankruptcy on Different Types of Businesses

  • Corporations: These types of businesses are separate from their owners. So, bankruptcy will not affect your assets. But your shares are an asset of bankruptcy estates and the trustee will liquidate them.
  • Partnerships: All business and personal assets are the same. It’s even harder for assets to qualify for getting exemption in personal bankruptcy. Your trustee will liquidate your assets to help pay off debts.
  • Sole proprietorships: This type of business is not a separate entity. All business and assets are personal. This may end your operations.

Type of Bankruptcy You Should File

It’s necessary to know what type of bankruptcy you should file to protect your business assets during your personal bankruptcy declaration.

Filing a type of bankruptcy whether it’s Chapter 7 or Chapter 13 will greatly depend on the type of your business assets. Thus, the type of your play a huge role in filing bankruptcy.

Bankruptcy Exemptions

You can keep your property that’s protected by a bankruptcy exemption. But, it’s very rare to get specific business exemptions.

Your Brooklyn chapter 7 bankruptcy attorney can tell you about the trade exemption. Your state determines whether you can choose between federal and state exemptions.

Federal exemptions are often higher, so your Brooklyn Chapter 13 bankruptcy attorney will evaluate this carefully.

Keeping Your Business Running During Bankruptcy

If you can’t protect your property with an exemption, you will lose it. You’ll be able to keep your business if:

  • Service-oriented Business

If you’re a sole proprietor of service-oriented businesses, like law offices or freelance writing businesses – you can still make it possible that your business runs during bankruptcy.

However, you’ll still have to exempt certain things. These include equipment, tools, furnishings, and other income sources. Your Brooklyn business assets bankruptcy attorney will let you know what to do.

  • Unsellable Corporation or LLC

If you’re an owner of a 100% interest unsellable corporation or LLC – it only means that you don’t own any account receivables, equipment, or business products; the business does.

This also holds if you own a portion of the series of interests in an unsellable corporation or LLC.

Businesses that Lose During Bankruptcy

  • Product-oriented Business

If you’re the sole proprietor of a product-oriented business that develops items or goods based on customers’ wants and needs.

  • Corporation or LLC

You own a hundred percent of interest or shares in a corporation or LLC.

  • Partnership

You’re a partner in a partnership.

What Does a Bankruptcy Trustee Do?

The bankruptcy trustee holds the property interest during the bankruptcy. This may include your business.

Trustees don’t want to deal with business lawsuits from your Brooklyn Personal Bankruptcy attorney. They ask for liability insurance for your business to help reduce the liability issues associated with your business maintaining it open during bankruptcy.

If your trustee feels your assets will disappear, they will take drastic measures. They will shutter a company and perform asset inventory.

But if your business has anything they can sell, the trustee is less inclined to close it.

Bankruptcy Lawyer in Brooklyn

Bankruptcy involves a weird part of the law because it’s more of a qualification process.

The laws about it merely give you instructions on how to complete a 50 to 60-page petition. You mustn’t miss a single step. You should need a top bankruptcy lawyer in Brooklyn. To save your business amidst your personal bankruptcy, call Ursulova Law now!

Ursulova Law offices, P.C.

Contact Ursulova Law Offices, P.C. to find out how our NY Bankruptcy Attorneys can help you today. Our offices are located in New York, Brighton Beach, Brooklyn and Garden City.