Small Business Bankruptcy Lawyer New Haven, CT
Small Business Bankruptcy Lawyer New Haven, CT
In today’s world, many Connecticut residents have decided that it is more financially lucrative to stop being an employee and instead operate their own home- or office-based business or contracting service. However, as a small business bankruptcy lawyer New Haven, CT can explain, these types of operations often require a major investment of both time and money. If sales goals are not reached, the small business owner can find themselves being harassed by creditors, struggling to pay off their company’s debt, while still trying to maintain enough of a living to pay their personal bills, like mortgage, utilities, food, etc.
In these situations, working with a New Haven, CT small business bankruptcy lawyer is an option the business owner may want to consider. While there are immediate impacts on credit ratings, these can be overcome. In the long run, bankruptcy can provide a small business owner with the fresh start they need to make their business a success.
Bankruptcy for Small Businesses
According to national statistics, approximately 30 percent of all new businesses fail within their first two years. Only fifty percent of businesses end up celebrating their five-year anniversary. As a New Haven, CT small business bankruptcy lawyer can explain, there are a number of reasons for these numbers, including high start-up expenses, unreached sales goals, issues with marketing potential consumers.
On a positive note, the longer a small business can hang on, the more their chances of success increase. For companies that find themselves in financial difficulties, filing for bankruptcy may be a way to recover from the initial financial burdens many new businesses go through. Rather than closing up shop, filing bankruptcy can help eliminate some debts and enter into more practical repayment plans with others. It also prevents creditors from pursuing legal actions against the business.
The types of bankruptcy that a small business owner may want to consider are:
- Chapter 7: If the business is a sole proprietorship, the owner may be able to liquidate both personal and business debts in a bankruptcy filing.
- Chapter 11: If the business is a corporation, LLC, or partnership, chapter 11 bankruptcy can help reorganize the amounts owed, allowing the business to discharge some debts while structuring repayment plans for others.
- Chapter 13: If the business is a sole proprietorship or other business with less than $1,184,200 in secured debts or less than $394,725 in unsecured debts, the owner may be able to avoid surrendering property while repaying creditors based on their business’ future earnings.
How to Find Out if Your Business Bankruptcy Will Affect Your Personal Property
As a business owner, you have a lot on your plate. If your business debts start to overrun the amount of money that you make, you may feel like your business is about to go under. In many cases, when the debt becomes too much of a burden, bankruptcy is the only option. While you should never file bankruptcy unless you are positive that it is the right move, it can be helpful if your business is struggling.
If you are considering bankruptcy, you may be wondering if you must file personal bankruptcy on behalf of your business. To understand what you may have to do to file bankruptcy, you have to ask yourself a couple of questions first.
Are You a Sole Proprietorship?
If you are a sole proprietor, then your business is not separate from you. If you have debts as a business, then these are also your personal debts. If you were to file bankruptcy on behalf of your business, then you would also have to include all of your personal business debts. Your bankruptcy estate will include business property and personal property.
Are You a Partnership or Corporation?
If you own a partnership or a corporation, then you are separate from your business. When your business has debt, it is not your personal debt. Likewise, if you have assets in the business, these are not personal assets. if you have a partnership or a corporation, then you can file business bankruptcy to handle your debts, rather than using personal bankruptcy. Now, if you have a partnership instead of a corporation, any personal debts that you have involved with the company will still be there after you file business bankruptcy. When you file business bankruptcy, it does not touch your personal assets or personal debts, even if these are debts that help the business.
How you handle bankruptcy will depend on the type of business you own. Sole proprietorships are not separate entities from you. This means that all your debts belong to the business. However, if you are a partnership or a corporation, you may be able to avoid personal bankruptcy. Bankruptcy law is complex and it may be helpful to have a bankruptcy lawyer to guide you through the process and to help you understand what options are in front of you. Find out about how to file bankruptcy by consulting with a bankruptcy lawyer today.
Once a business files for bankruptcy, an automatic stay goes into effect that prevents creditors from taking any further action on its debts. In addition to filing the bankruptcy for you, a small business bankruptcy lawyer New Haven, CT clients recommend from The Law Offices of Ronald I. Chorches can renegotiate debts and vendor contracts, explain what small business loans may be available, and help your company get back on track.