Can I still keep my business open if I file bankruptcy?

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Can I still keep my business open if I file bankruptcy?

I am a sole owner of a business and I am considering bankruptcy. My wife and I would declare personal and I for my business as well.

Asked on July 7, 2011 under Bankruptcy Law, California

Answers:

Mark J. Markus / Mark J. Markus, Law Offices of

Answered 12 years ago | Contributor

Is this business just a dba of yours, or is it a corporation?  If the latter, for sure you can keep it operating.  If the former, it depends on a number of factors, including what the Trustees in your jurisdiction allow and what chapter of bankruptcy you file.   In a Chapter 13, you for sure can continue operating a sole proprietorship.  In a Chapter 7 you usually can, but you need an experienced attorney to analyze your situation fully to make sure.   You would need to list all the receivables and assets of the business (there really is no separateness of the business and yourself personally in a sole proprietorship anyway) and hopefully exempt them.  There may be other intangible assets of the business that need to be valued and exempted such as goodwill, your phone number, client lists, etc.

In most cases where it's simply personal services, there's no problem continuing a self-employed business in a Chapter 7 case, but if you're operating an ongoing business (like a restaurant or something), then it would have to close in a Chapter 7 case.

Mark J. Markus, Attorney at Law

Handling exclusively bankruptcy law cases in California since 1991.

http://www.bklaw.com/

Follow Me on Twitter:  @bklawr

Mark J. Markus / Mark J. Markus, Law Offices of

Answered 12 years ago | Contributor

Is this business just a dba of yours, or is it a corporation?  If the latter, for sure you can keep it operating.  If the former, it depends on a number of factors, including what the Trustees in your jurisdiction allow and what chapter of bankruptcy you file.   In a Chapter 13, you for sure can continue operating a sole proprietorship.  In a Chapter 7 you usually can, but you need an experienced attorney to analyze your situation fully to make sure.   You would need to list all the receivables and assets of the business (there really is no separateness of the business and yourself personally in a sole proprietorship anyway) and hopefully exempt them.  There may be other intangible assets of the business that need to be valued and exempted such as goodwill, your phone number, client lists, etc.

In most cases where it's simply personal services, there's no problem continuing a self-employed business in a Chapter 7 case, but if you're operating an ongoing business (like a restaurant or something), then it would have to close in a Chapter 7 case.

Mark J. Markus, Attorney at Law

Handling exclusively bankruptcy law cases in California since 1991.

http://www.bklaw.com/

Follow Me on Twitter:  @bklawr


IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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