10 Dec What is the Impact of My Personal Bankruptcy on My Small Business?
How does a personal bankruptcy filing impact your small business? The answer? It depends….
If you operate your business as a sole proprietorship, you and your business are one. The debts of “John Smith d/b/a Smith Consulting” are personal to John Smith. Therefore, if you are a proprietorship, you are required to include both your personal and “business” debts in your bankruptcy filing. Similarly, the assets of “John Smith d/b/a Smith Consulting” are assets of the estate and should be listed on Schedule B of your petition.
If you operate your business as a corporation, a personal bankruptcy can get tricky. First, you need to consult with a corporate lawyer in the State where you file and in the State where the business is incorporated (if appropriate). Secondly, recognize that your shares in the corporation (stock or undistributed cash) are assets of your personal bankruptcy estate and possibly subject to seizure or administration by the trustee.
Ongoing business operations can also be problematic. As a rule, you need to be very careful about conducting on-going business during the time you are filing bankruptcy.
Jonathan Ginsberg, Esq.
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