Many small businessowners are feeling financial pressure in today’s current economy. Not only is it stressful to have a struggling business, it is commonly compounded by the fact that many owners have invested in the business personally. Not only has the owner contributed time and effort into the company, but the owner also has taken on a large amount of personal debt in order to support the business.
Business owners typically finance their enterprise by taking out loans, incurring credit card debt, and signing personal guarantees. Some even go so far as to use money from their own retirement accounts. As a result, many small business owners incur a large amount of personal debt in trying to keep their business afloat.
Many small business owners seek the protection of bankruptcy, but it is always a concern of how their personal filing will affect the business. If the company is legally incorporated, it does not necessarily have to file its own bankruptcy case. This does not mean that the owner’s personal filingwill not have an affect on the business. A debtor’s ownership interest in a company will be considered an asset of the bankruptcy estate. This means it could potentially put the business at risk if considered valuable by the trustee.
If you are a small business owner, or you have an ownership interest in a business, and you are considering filing for bankruptcy protection, you should meet with an experienced bankruptcy lawyer to discuss the consequences and benefits of filing your case.