How can we declare a business bankruptcy? 31 Answers as of July 03, 2013

We own a small business corporation. We have been unable to pay bills for several months and are closing our doors next week. Will we be personally responsible? How do we declare business bankruptcy?

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Theodore N. Stapleton, PC
Theodore N. Stapleton, PC | Theodore N. Stapleton
You could file a chapter 7 for the business or simply let creditors get judgments against the company as long as you have not personally guaranteed the business debt.
Answer Applies to: Georgia
Replied: 11/9/2011
Heupel Law
Heupel Law | Kevin Heupel
Business debts can be complicated so my best advice is to consult a bankruptcy attorney who handles business debts.
Answer Applies to: Colorado
Replied: 11/4/2011
Philip R. Boardman, Attorney at Law
Philip R. Boardman, Attorney at Law | Phil Boardman
You will probably have to file a personal bankruptcy since you may be personally liable for the business debts.
Answer Applies to: Virginia
Replied: 11/4/2011
The Law Offices of Kristy Qiu
The Law Offices of Kristy Qiu | Mengjun Qiu
That depends on the corporate structure. If you set it up as a limited liability company, you won't personally liable, however, if you have ever personally guaranteed a loan or credit card, you will remain personally liable even if your comp is limited in liability. If you're closing your doors, what you need is probably a chapter 7. business bankruptcy is extremely complicated.
Answer Applies to: Florida
Replied: 11/4/2011
Bankruptcy Law Center
Bankruptcy Law Center | Bill Zurinskas
A corporation can file for chapter 7 bankruptcy (liquidation) but cannot receive a discharge of its debts. A corporation can file chapter 11 bankruptcy to restructure its debts, but this procedure is very expensive for a small corporation. More commonly the shareholders, directors and officers of the corporation are also liable for the coporations debts (generally by co-signing or guaranteeing the corporate debts) and end up filling for personal bankruptcy.
Answer Applies to: Colorado
Replied: 11/4/2011
    Lake Forest Bankruptcy
    Lake Forest Bankruptcy | Anerio V. Altman, Esq.
    This depends upon which business form you have, and whether you even need to file a Business Bankruptcy. Many times, a business bankruptcy is actually unnecessary; If you have a corporate entity, then unless you are a co-signer on these corporate debts, you can let the corporation deal with the debt and never close it. Thats the point of having a corporation. You also need to be VERY VERY CAREFUL about filing the Corporate Bankruptcy simply because transfers from the corporate entity to you can be pulled back by the Chapter 7 Trustee. You could be forced to disgorge what monies the Corp paid you within 2 years prior to filing. If you are personally liable for the debt, or you have a sole-proprietorship, then you yourself may need to file the Bankruptcy. Bottom line: DO NOT file the corporate bankruptcy without seeking counsel. It may be a fantastically horrible thing to do.
    Answer Applies to: California
    Replied: 11/4/2011
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    You can see a local attorney and file a business bankruptcy under chapter 7 to get rid of unsecured business debt. However, if you personally guaranteed anything, such as office lease, equipment lease, loans, etc, then you will still be liable personally. You may be better off shutting down the business and filing personal bankruptcy.
    Answer Applies to: New York
    Replied: 11/4/2011
    Charles R. Nettles - Attorney at Law
    Charles R. Nettles - Attorney at Law | Charles R. Nettles
    Filing for a business bankruptcy is not a whole lot different than filing a personal bankruptcy, it's a matter of pulling together all of the necessary paperwork to answer the questions in the bankruptcy petition and filling it out. As far as personal liability, that will depend in large part upon how you obtained the credit and through whose name it was under. If you signed a personal guaranty on the debt, you will be held liable.
    Answer Applies to: Texas
    Replied: 11/4/2011
    The Law Offices of Seth D. Schraier
    The Law Offices of Seth D. Schraier | Seth D. Schraier
    First, it depends what the filing status of your business is. If you filed with the New York Secretary of State as a LLC or related limited liability company, then you can shield yourself personally from the debt that the business accrued. Secondly, you should consult a bankruptcy attorney, as it appears you have a case to file for Bankruptcy on behalf of your business and eliminate the debts as much as possible. It is highly recommended that you hire a bankruptcy attorney, as the filing process and forms to file and have your bankruptcy granted can be quite daunting.
    Answer Applies to: New York
    Replied: 11/4/2011
    Weber Law Firm, P.C.
    Weber Law Firm, P.C. | William Weber
    Consult with a qualified attorney. Bankruptcy is too complicated to pursue without an attorney.
    Answer Applies to: Texas
    Replied: 11/4/2011
    Law Office of Harry L Styron
    Law Office of Harry L Styron | Harry L Styron
    You can file a Chapter 7 bankruptcy for the business, where a bankruptcy trustee will take over the business, liquidate it and pay its debts to the extent possible. Whether or not you are personally responsible depends on whether you have personally guaranteed any of the business debt, and to a lesser extent whether you have kept appropriate records of the operation of the corporation. You need to have a detailed discussion with a bankruptcy attorney about your situation before making any decisions.
    Answer Applies to: California
    Replied: 11/4/2011
    Canty Law Firm
    Canty Law Firm | Timothy Canty
    If the business is closing down and has few assets, the creditors can pursue you if you guaranteed the debts or otherwise became liable. The business itself need not file BK unless there are assets that you want to distribute to creditors. There are many considerations here and I don't have enough facts to give you a complete answer.
    Answer Applies to: Colorado
    Replied: 11/4/2011
    Moore Taylor Law Firm, P.A.
    Moore Taylor Law Firm, P.A. | Jane Downey
    You should consult with a bankruptcy lawyer who is a certified specialist. In SC, a corporation can't represent itself. You will be responsible if you signed guarantees.
    Answer Applies to: South Carolina
    Replied: 11/4/2011
    Dan Wilson Bankruptcy
    Dan Wilson Bankruptcy | Dan Wilson
    What you really need is a personal Ch 7. Does your business have any assets? If so, your business creditors have a claim on those assets. Your personal Ch 7 will discharge your personal obligation for the business debts.
    Answer Applies to: Colorado
    Replied: 11/3/2011
    Law Office of Michael Johnson
    Law Office of Michael Johnson | Michael Johnson
    You should consult with attorney to help you.
    Answer Applies to: Florida
    Replied: 11/3/2011
    Buff & Chronister
    Buff & Chronister | G. Scott Buff
    First, you file a business Bankruptcy by having your entity file for either Chapter 7 or Chapter 11. It sounds as if you are contemplating a Chapter 7, as you are winding down and closing the business. Please understand that only a natural person receives a discharge of his or her debts. An entity such as a corporation or a limited liability company cannot receive a discharge. Therefore, it may make since to have your business entity file for Bankruptcy in order for there to be an orderly winding down and liquidation of business assets. If you personally guaranteed business debts, then you are personally liable for any debts not paid by the business. If this is the situation, then it may make since for you to file for Bankruptcy. You have a tricky situation that is fact sensitive and you should consult an attorney experienced in both consumer and business Bankruptcy matters.
    Answer Applies to: Georgia
    Replied: 11/3/2011
    Judith A. Runyon, Esq. Attorney at Law
    Judith A. Runyon, Esq. Attorney at Law | Judith A. Runyon
    You should know if you are personally liable for the corp debt. Talk to a bankruptcy attorney.
    Answer Applies to: California
    Replied: 11/3/2011
    Law Offices of Kenrick Young
    Law Offices of Kenrick Young | Nicholas Lazzarini
    Generally speaking, you are not personally liable for business debts when you put the business into bankruptcy. However, it will depend on how the business was structured, whether personal accounts were used to pay for business debts at any times, and other factors. A bankruptcy attorney can help you plan your bankruptcy filing to protect your personal assets as you close down the business.
    Answer Applies to: California
    Replied: 11/3/2011
    Law Office of Susan G. Taylor
    Law Office of Susan G. Taylor | Susan G. Taylor
    It might not be necessary to file a business bankruptcy unless the corporation has assets. You may be personally liable on the debts only you could know. Review the agreements and your credit reports. If so, it may benefit you to file for personal bankruptcy.
    Answer Applies to: Texas
    Replied: 11/3/2011
    Gregory J. Wald, Attorney at Law
    Gregory J. Wald, Attorney at Law | Gregory J. Wald
    The purpose of a corporate bankruptcy is to liquidate the assets of the corporation and distribute them fairly among the creditors. The debts of the corporation are not discharged (eliminated), but creditors understand that the company is now out of business and they will not be able to collect from the corporation. It is frequently the case that the corporation no longer has significant assets or that its assets were security for a bank loan and everything was turned over to the bank. For that reason, many businesses do not need to file bankruptcy even though they have unpaid debts. Instead, I write a letter to the creditors explaining the situation. However, it also frequently the case that the owner of the corporation has guaranteed the corporate debts or has contracted under their own name. In that case, it may be necessary to file a personal bankruptcy to protect the owner from collection efforts.
    Answer Applies to: Minnesota
    Replied: 11/3/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    A corporation can file a liquidation under chapter 7. Debts owed by the corporation do not carry over to the individuals unless they have guaranteed them.
    Answer Applies to: California
    Replied: 11/3/2011
    Law Offices of Daniel Moulton
    Law Offices of Daniel Moulton | Daniel Moulton
    File a chapter 7 and include your business tax ID and you should be off the hook for anything individually.
    Answer Applies to: Illinois
    Replied: 11/3/2011
    The Orantes Law Firm
    The Orantes Law Firm | Giovanni Orantes
    If you observed all the corporate formalities to ensure the separateness between you and your corporation (such as maintaining all the customary insurance policies in the industry and holding board meetings, etc.), you should not be liable to ordinary creditors unless you also executed personal guarantees in conjunction with credit extended to your corporation. You need to sit down with an experienced bankruptcy attorney to discuss all the facts relevant to determine whether you should file a bankruptcy case, what chapter, and whether the corporation should file, you, or both.
    Answer Applies to: California
    Replied: 11/3/2011
    CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE).
    CONSUMER PROTECTION ASSISTANCE COALITION, INC. (DE). | Gary Lee Lane
    A lawyer can file for you.
    Answer Applies to: California
    Replied: 7/3/2013
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    You are liable for loans you personally guaranteed.
    Answer Applies to: California
    Replied: 11/3/2011
    Tony M. May Attorney At Law
    Tony M. May Attorney At Law | Tony M. May PC
    I cannot answer the questions you presented with the facts provided. Whether or not you will be personally liable depends on how the business was set up and whether or not you signed any personal guarantees. However, declaring bankruptcy for your small business may not be the best alternative for you, as filing for personal bankruptcy is often a better alternative. However, this decision can only be made after a comprehensive review of your situation.
    Answer Applies to: Nevada
    Replied: 11/3/2011
    LAW OFFICE OF MARGARET L. EVANS, PC
    LAW OFFICE OF MARGARET L. EVANS, PC | Margaret L. Evans
    What chapter you will need to file will depend on the extent and type of debts you owe. You should gather ALL of the past six months worth of BUSINESS bank statements, business bills, PERSONAL bank statements, and personal bills and then meet with a bankruptcy attorney to determine what chapter will best suit your situation.
    Answer Applies to: South Carolina
    Replied: 11/3/2011
    Law Offices of Joseph A. Mannis
    Law Offices of Joseph A. Mannis | Todd Mannis
    Your best bet would be to talk to a bankruptcy attorney such as myself. You might very well be personally responsible, in which case a personal bankruptcy might well be necessary.
    Answer Applies to: California
    Replied: 11/3/2011
    AyerHoffman, LLP
    AyerHoffman, LLP | David C. Ayer
    If your business is duly incorporated and there has been nothing to indicate that the business's affairs and your own are co-mingled, that the business has merely been an "alter-ego" for you, or any other fraud or impropriety, the "corporate veil" should shield you from any personal liability. If the debts are entirely from the business, you will most likely be filing for Chapter 11 protection. Bankruptcy is a complex process involving federal law and specific procedures. Mistakes can result in your company's bankruptcy being dismissed or worse.
    Answer Applies to: Massachusetts
    Replied: 11/3/2011
    Law Office of Todd M. Gers, PLC
    Law Office of Todd M. Gers, PLC | Todd Gers
    This is a complicated questions and would require more information to really give you an idea of where you stand with respect to both the business and personally. Is the debt is the name of the business or you as individuals? Do you have any personal guarantees in business debt?
    Answer Applies to: Michigan
    Replied: 11/3/2011
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