How do you know if your small business can qualify for bankruptcy?

Asked over 5 years ago - Daphne, AL

We are an LLC and have a business credit card and a business flexline account with a bank. They are in the business' name. What will happen if we file bankruptcy to the notes on these 2 accounts? We have tried to sustain, and we have exhausted our funds. Please help us!

Attorney answers (1)

  1. Barry W. Rorex

    Contributor Level 14

    Answered . There is not enough information to provide a comprehensive answer to your question. Two important considerations would be whether you had personal liability on the LLC's debts and whether the LLC had assets. If you provided personal liability guarantees for the LLC, the mere fact that the debt to the LLC is discharged in bankruptcy will usually not prevent the lender from seeking payment from the guarantors. On the other hand, if the LLC has no assets and there are no personal guarantees, bankruptcy may not be the best route because the company may be judgment proof. Another consideration may be a reorganization under Chapter 11 if there are significant assets and the company still has viable earning power. These are just some of the options you should explore with a competent bankruptcy attorney so that you can make an informed decision on the best course of action.

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