The decision of whether to file for personal or business bankruptcy can be heartbreaking as well as confusing and uncertain. Bankruptcy law helps protect both individual people and business entities from drowning in debt. It is never a fun position to be in but considering bankruptcy options can result in relief from a truly bad situation.
When To File For Personal Bankruptcy
If you do not own a business, then filing for personal bankruptcy is simply your only option if you can’t pay your debts. If you do own a business, you will have to consider whether the debts are because of personal expenditures or business expenses. If they are from personal expenses unrelated to your business, personal bankruptcy is likely to be the option you pursue.
Your personal debt may be causing your business to suffer, in which case it might be the better option to declare personal bankruptcy in order to save your business. Depending on the situation, declaring personal bankruptcy can shield your business assets from collection and allow you to keep important items such as computers and needed equipment. Remember that some property is exempt from debt collection under state and federal laws. A qualified Las Vegas bankruptcy lawyer familiar with Nevada law will ask you about your specific situation and then present you with options for how to navigate your way out of debt.
When To File For Business Bankruptcy
Knowing when to file for business bankruptcy depends on several factors. You should always speak with your bankruptcy lawyer before making any final decisions. Be sure to familiarize yourself with the different kinds of business bankruptcy, especially Chapter 7 and Chapter 13, so you can make an educated decision about your next steps forward.
First consider the business structure you chose when starting up your company. Sole proprietorships have no legal differentiation from your personal finances. This is why they are simpler to set up but carry more risk. Other types of business organization, including Limited Liability Corporations (LLCs) and corporations are legally separate entities from you personally and can file for bankruptcy without being catastrophic on your personal finances.
It is important to note that if you signed something known as a personal guarantee with a lending agent when you started your business, you may still be liable to pay back everything you owe even after filing for business bankruptcy. This can make business bankruptcy an unideal option. Remember that filing for business bankruptcy often means giving up your business, so it is not a decision to make lightly. There are options in bankruptcy law for you to file business bankruptcy, gain relief from creditors and then restructure in the hope your business will begin earning money again and can pay off its debts.
If you are considering filing for bankruptcy in either a personal or a professional capacity, Fair Fee Legal Services in Las Vegas can help you both understand and navigate your options to hopefully attain the best possible outcome.
Fair Fee Legal Services
8665 South Eastern Avenue, Suite 101
Las Vegas, Nevada 89123