Magical Business Documents

If you own a business that is registered as an association and you are in the position of having to declare personal bankruptcy, what happens to your business? Does that mean personal bankruptcy is the bankruptcy of small businesses as well?

Owning a partnership means that your personal and business finances are one thing. It also means the same for partners. Each partner is responsible for all debts of the company.

From his personal debts and business debts are the same, are not separate when you file for bankruptcy protection. This means your personal assets and business assets both included in your bankruptcy documents.

Many of his personal property will be considered exempt under a Chapter 7 bankruptcy – which means that you get to keep these assets even though they are wiping out their debt. Unfortunately, this is not usually the case when it comes to business assets. Most of these assets will become property of the estate, and settled to pay your creditors of your debt.

Unless your partner can replace these assets, this usually means that your association will have to close.

There are a couple of options that can save your business, however. First, you can apply for protection of Chapter 13 bankruptcy, instead of filing Chapter 7. This gives you the ability to repay their debts over a period of time – usually 3 to 5 years. Although Chapter 13 does not erase their debts, allowing you to keep your business assets for you and your partners can continue to operate the business.

The other option is to enter the business. This will help you separate your personal and business liability. While the subject will become the master of his participation in business when you file bankruptcy, you have the option to repurchase its shares at their fair market value. Often, the fair market value is less than the amount of debt you have, so it may be a less costly way to obtain debt relief, keeping your business.