Whether you are debating between a Debt settlement and bankruptcy filing or have decided to file bankruptcy but are worried about the effects it might have on your credit, you are bound to have many questions.
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Yes, small business owners (whether it’s a sole-proprietorship or an incorporated business) can seek bankruptcy protection while continuing to operate their business by filing under Chapter 13.
Here is why Chapter 7 bankruptcy is generally considered a bad idea for business debtors. After you file your bankruptcy, your business becomes an asset of the bankruptcy estate and thus it can be sold or distributed to pay creditors in a Chapter 7 bankruptcy. Furthermore, due to the liability issues of an operating retail space, sales tax liability, or unpaid wages, etc., you may not be able to keep operating the business while it is still an asset of the bankruptcy estate (i.e. while your Chapter 7 case is pending).
By filing a Chapter 13 bankruptcy, you can continue to run the business, and use the proceeds to fund
a Chapter 13 plan to make your plan payments and eventually wipe out your debts.
The information contained on this site is for general education only and it is not, nor is it meant to be, legal advice. You should seek advice from a bankruptcy attorney for your specific situation.