Business bankruptcy can be a solution if your company has too much debt. When you file for business bankruptcy, you will need to make the decision about what chapter of the bankruptcy code to file under. Chapter 7 bankruptcy is one option that is available to you, but it may not be the right one depending upon your circumstances. 
Ronald D. Weiss, P.C. represents clients dealing with business bankruptcy in Melville, NY and surrounding areas. Call today to schedule a consultation and learn how you can get help with a business bankruptcy.

Is Chapter 7 Right For Your Business?

When you file for business bankruptcy, you have several different options depending upon how your business is structured and whether you want to keep your business open or not.  For individuals who run small sole proprietorships, your two primary options for business bankruptcy are generally Chapter 7 and Chapter 13.  For larger businesses or for companies operated as corporations, then the usual types of business bankruptcy filed include Chapter 11 and Chapter 7.
Chapter 7 is different from Chapter 11 or Chapter 13 because Chapter 7 is a liquidation bankruptcy. Your business assets are going to be sold when you file Chapter 7 business bankruptcy, unless those assets are exempt under New York law.  The proceeds from selling the business property and assets are distributed among the creditors to whom your company owes money.  At the end of the Chapter 7 business bankruptcy filing, you will no longer continue to operate the business and the business will be closed and dissolved.
With a Chapter 11 or Chapter 13, on the other hand, property is kept, debts are negotiated and the business is able to continue to operate.

What Does Chapter 7 Business Bankruptcy Mean For You?

If you file a Chapter 7 business bankruptcy, this could impact your personal financial situation.  If you are running a business as a sole proprietor, then you and your business are not separate in the eyes of the law. Money and assets that belong to you also belong to your business and vice versa.  This means you cannot file a Chapter 7 business bankruptcy without filing a Chapter 7 personal bankruptcy.
There are limits on who can file Chapter 7 and if you make too much money, you will be unable to choose this option and will instead need to resolve business and personal debt problems with a Chapter 13 filing.  You may also lose some of your non-exempt personal assets.
If your business is a separate legal entity like a corporation, on the other hand, then your personal finances are not likely to be affected by the business bankruptcy. The corporation will go bankrupt and your losses will be limited to investments made in the corporation. However, if you personally guaranteed business loans, then the creditor could still come after you to try to collect even after a Chapter 7 business bankruptcy.
Understanding the impact of Chapter 7 on your company can be complicated and you should speak with an experienced Melville, NY bankruptcy attorney who can help. Ronald D. Weiss, P.C. is here to assist with business bankruptcy. Call today to learn more.
To learn more, please download our free Bankruptcy in New York here.