You may have a significant amount of personal debt that prompts you to file for bankruptcy. But at the same time, you may have a large sum of business debt that you are struggling to manage. With this, you may be curious whether you can declare these debts simultaneously. Read on to discover the possibility of including business debts in your personal bankruptcy filing and how a seasoned Rockland County bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq. can help you handle this.
Is it possible to include my business debts in my personal bankruptcy filing?
The short answer is, yes, it may be possible to incorporate your business debts into your personal bankruptcy filing. However, the combining of your business debts with your personal debts is only doable if you are the sole proprietor of your business.
This is because, legally, your sole proprietorship does not have a separate existence from you. In other words, your business income and losses are taxed on your personal income tax return. Ultimately, this may prompt your bankruptcy trustee to group your business assets with your personal assets. Altogether, they may sell these assets to pay off your priority creditors.
What happens to my business shares if I file for a personal bankruptcy petition?
On the other hand, say that you have little to no business debts to report when you file for a personal bankruptcy petition. Nonetheless, your stake in a business entity may still be affected. This is because a business entity may now have a say in how to handle your shares. This is so other members do not get roped into your ongoing bankruptcy proceedings and all that it entails.
Further, the fate of your business shares may depend on whether you are part of a partnership, limited liability company, or corporation. Examples for each type of business are as follows:
- If you are part of a partnership: then you may be required to sell your interests back to the partnership. This is so your partner does not become involved in your bankruptcy proceedings.
- If you are part of a limited liability company: then you may be required to sell your interest back to the business. This is so the business avoids any disturbances to management decisions.
- If you are part of a corporation: then your filing of a personal bankruptcy petition may not affect the business management. This is because corporations are independent of their owners and therefore protect from liabilities, losses, and debts.
In the end, the first step you must take in your bankruptcy proceedings is to retain the services of a competent Rockland County bankruptcy attorney. So call us at The Law Offices of Allen A. Kolber, Esq. today.