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Sole proprietorship bankruptcy effecting spouse?
Milpitas, CA
Viewed 1351 times.
Posted about 1 year ago in Bankruptcy / Debt
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My husband currently owns a business (sole proprietorship) that is not doing too well. He is considering filing for bankruptcy, but I would like to know if the bankruptcy will effect our personal assets.
Our personal finances are fine. We have been marriead a year, both have secure jobs (my husband works a separate day job from the store that he owns), and have enough combined income to take care of our personal bills and such. Our bills are paid entirely through the income we recieve from our jobs. We do not take income from his store. Personally, we are not struggling with debt, but we do have a few lingering college loans and our mortgage. All are in good standing. My husband has been sole proprietor of a hobby store for 6 years. The store has not been doing well the past couple of years, so my husband is thinking about bankruptcy for the business. However, since he is sole proprietor I'm afraid that the creditors will come after our personal finances and assets. Is this what will happen? Is there any way for the business to go bankrupt without affecting our personal finances and the money we earn separately? Thank you. Any information will help. - Is this your question? Add additional information Answers (1)
Lesley Abigail Hoenig
This attorney is licensed in Illinois and 2 other states.
Posted about 1 year ago.
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Something you need to understand about filing bankruptcy for a sole proprietorship is that it is exactly the same as filing a personal bankruptcy. If your husband files bankruptcy, it doesn't only effect the assets of his business, it effects your marital assets as well (and transferring property is into one or the other's name is a really bad idea, it will only make things worse in a bankruptcy situation). While you would not get a discharge on the debts if you don't jointly file, the bankruptcy will have a negative impact on those debts because your spouse will get a discharge. Additionally, if you have assets that are above and beyond what you can claim exempt, you will lose them in a chapter 7. Your spouse may want to consider a chapter 13 reorganization, since you can make ends meet other than with the business.
You will need to consult with a local bankruptcy attorney (or your husband will at least), because this is fact specific and I gave you only a general overview of what to consider. How it effects you really depends on your individual circumstances. |
