I would like to file bankruptcy, but I own a business and how does that effect my filing. I am the only shareholder.

Asked over 4 years ago - Prior Lake, MN

I have thousands of dollars in personal debt, but own a small business and in the process of getting a loan to use as working capital and equipment purchase. I am the only shareholder in the business. Can the creditors come after my business once I file? Do I need to sign my business over to someone else - or can I keep the busienss and all assets before, during and after my bankruptcy. I have no debts from the business and the debts are from past medical, utilities, very small credit card debt and judgements, etc which I am doing the bankruptcy on.

Please advice.

Attorney answers (1)

  1. Cameron Royal Kelly

    Contributor Level 10

    Answered . First, is the business incorporated or an LLC. If not, all of the business assets will be considered personal assets and part of the bankruptcy process.

    If you have formed an entity, you will have to disclose and value your ownership interest in the business. For example, in your filings you would list ownership of 100% of the membership units in _____________, LLC, valued at $___________. Depending on the extent of your other assets and the value of the LLC, it may or may not be exempt. If the asset (membership units) are exempt, it means that they can not be touched by the bankruptcy trustee or your creditors.

    Be very careful not to make any transfers prior to talking to a competent bankruptcy attorney. there are a number of lookback periods when filing a bankruptcy. What this means is that if you have transfered property within a certain amount of time prior to filing, the court will still consider it in your bankruptcy.

    The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change. Attorney is licensed to practice law only in the State of Minnesota. Responses are based solely on Minnesota law unless stated otherwise.

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