are small business assets exempt under personal chapter 7 bankruptcy petition in CA state

David Leibowitz

Theoretically, a bankruptcy trustee could close your business and try to sell it.
Your tools are at risk unless they can be claimed as exempt,.
There are rather generous exemptions in California.
You'd have to work out a deal with your landlord for renting your place of busienss.

If your business has no value without you, I can't imagine a trustee liquidating it. Be sure to protect your business assets with exemptions to the fullest extent possible.

Mazyar Malek Hedayat

I have represented many people who owned their own businesses and chose not to incorporate - making them into sole proprietors like you. A couple of things remained constant throughout all those cases

1) the entrepreneurs really "were" the business, so it to "shut down" the business would probably result in denying the debtor an opportunity to make a living - Trustee's don't like doing that, and the bankruptcy law doesn't favor it either

2) the most important "assets" of a sole proprietorship are the owners' energy, salesmanship, and client lists, and for the most part these things can't be sole or transferred so no matter what the Trustee does you should be able to start fresh - even with another identical business.

Of course these points are general in nature, but if I had to I'd bet that you'll end up going right back into the same line of business after your bankruptcy without much trouble. One last option you might want to consider is to take jobs working for someone else in the same field (possibly a supplier, customer, or other business associate). This way you don't risk the appearance of having "popped up" again to thwart creditors - which is a definite no-no.

Hope this information helps. Good luck in your endeavors.

P.S. I notice you are from Murietta, California. We almost bought a house there, and it's gorgeous. So enjoy that as well.

Lesley Abigail Hoenig

I am not familiar with california exemptions, but most states provide a tools of trade exemption (whether it's enough to exempt all your tools is another story), and there may be other exemptions that can be applied to any property at all (like a wildcard exemption) that could help. However, a chapter 7 is a liquidation, which means any non exempt assets can be liquidated. If you have any assets from the business that cannot be exempted, you will not be able to effectively continue operating under a chapter 7 bankruptcy. I do not know if you have the income to do it, but a chapter 13 may be a better alternative because it will allow you to continue operating the business, and reorganize your debts (and likely pay less than the total amount owed). You really need to speak with a local bankruptcy attorney to figure out the best thing for you to do in your situation.