Personal Bankruptcy for Sole Proprietor

Personal Bankruptcy for Sole Proprietor "When a person decides to establish a business, he or she must make numerous decisions, including where to locate the business, how to market, and what business strategy to employ. The legal aspects of starting a business, particularly for a first-time entrepreneur, may appear less essential than making money and managing the business.The first legal principle associated with sole proprietorships is that the business is not distinct from its owner. If you are in such a predicament, you are likely painfully aware of this truth. This means that the business owner is personally responsible for any debts incurred by the company.This personal liability of a sole proprietorship has severe implications if the business files for bankruptcy. First, a sole proprietorship cannot file for bankruptcy without the business owner (one reason to establish the business as an LLC or corporation). Second, the assets of the individual proprietor may become accessible to both the company's and the individual's creditors.When it comes to their own personal business, many individuals wonder if the bankruptcy trustee or court will shut it down entirely. The answer to this query depends on a variety of variables. The most important factor, however, is the Chapter of bankruptcy that the business proprietor chooses to file with the bankruptcy court.Chapter 7 is often referred to as liquidation. To repay creditors, the Chapter 7 trustee will liquidate all ""non-exempt"" assets. A company that is unable to exempt a significant portion of its assets will be required to close due to its inability to function as needed in comparison to its business requirements. There is also a growing trend of trustees closing their sole proprietorships to prevent the business from incurring further liabilities.If the business proprietor has substantial assets and desires to continue operating the company, Chapter 13 may be the best option. In Chapter 13, the debts of the proprietor are reorganized and a payment plan is devised to repay a portion or all of the debts over a period of three to five years. The owner can retain all of the business's assets during the repayment period.Consider all of your options, including establishing a separate business identity, if you are contemplating bankruptcy due to your debts as a sole practitioner. If bankruptcy is required, call the Henshaw Law Office at (408) 599-1303 immediately.
" - https://www.affordablecebu.com/