If you own your own business here in southern New Jersey, that business could be at risk if you file bankruptcy. This is true whether it is a sole proprietorship, subchapter S corporation, or LLC. If you are getting divorced, it can get even more involved.
Complications can arise when a husband and wife own a business together (or just one spouse owns it), then file for a divorce. That business can well be a marital asset subject to equitable distribution or a key source of household income. That is why it is very important to be careful about a bankruptcy filing if it is a part of your divorce strategy.
Why Could the Business Be At Risk in Bankruptcy?
If the business is a sole proprietorship, then there is no line drawn between you and your business when it comes to assets or bills. The business assets are fair game for liquidation by the trustee if they cannot be exempted.
If it is a corporation or LLC, there is often a distinction between your assets and those of the business along with who owes what when it comes to the liabilities (e.g. did you sign any personal guarantees for any of the debt).
However, your ownership interest of the business is an asset, and since small businesses like these are not publicly traded, the only way to get at the value of said business to raise money to pay creditors is to sell it.
So What is the Problem In My Divorce?
Problems can arise in situations where the business is the sole source of income for one spouse (enabling that spouse to pay alimony and child support to the other), or where the value of the business is part of an overall equitable distribution scheme.
The bankruptcy filing of one or both of the spouses (as owners of the business) could cause complications in the form of a loss of the asset or an inability to pay a support obligation.
What Should I Do?
Considering the risks to your business and your divorce, you don't want to handle this alone. You want an experienced bankruptcy attorney working with your divorce attorney to come up with the best overall strategy possible.
If you live in Burlington, Camden, Gloucester, Salem or Cumberland County, are a business owner, and are thinking about filing bankruptcy, call my office at 856-432-4113 or contact me through this site for a free consultation to discuss your case.
If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.
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