If you are a small business owner, either through a sole proprietorship, LLC, or subchapter S corporation, and you (and your spouse) are the sole owners, this can become a potential problem, if you decide to file a chapter 7 bankruptcy.
This is because your ownership interest in the business is considered an asset in the bankruptcy and, in some cases, can be sold by the trustee! For this reason, you should proceed with caution and consult with an attorney on the details. Here's why.
In the case of a sole proprietorship, you are the business, and the business is you. Any asset of the business is your asset, and can be sold to raise money to pay your creditors, unless it can be exempted.
An LLC or "sub S" corporation is a "closely held" or "Mom and Pop" business that shields the owner(s) from liability for business debt. It can own its own assets and owe its own debts. As it is not publicly traded, you are the business, and the business is you, so selling your ownership interest (as opposed to shares in Verizon, for example) is not a viable option for the trustee. Find out more!So What Should I Do?
If you are a small business owner here in southern New Jersey and are considering bankruptcy, please feel free to call me at 856-432-4113 or contact me through this site to schedule a free consultation in my Woodbury office. I can help you to determine whether your business would be at risk if you filed.
If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.