Here are some assessment questions and their implications. Use these questions, in addition to a discussion with a qualified Business Bankruptcy attorney to determine whether the business bankruptcy process is right for you.
How liable are you personally?
Have you personally signed for loans meant for business purposes? Have you signed a “Personal Guarantee”?
Are you operating through a sole proprietorship, partnership, or DBA? If so, you will need to work through a Personal Bankruptcy.
Did you offer your property as collateral for credit? If so, that property may or may not be seized during the bankruptcy process. It may also be seized and sold as part of a judgment from a lawsuit.
How have you signed all of your credit agreements?
If you signed “as” an officer of a corporation, you are safe.
However, if you just signed using your own name, aggressive creditors can argue that you essentially made a personal guarantee on the credit agreement. So the right way to do this would be “George Arlington, as CEO of Madison Lawn Care, INC.”
Fraud. If you used fraudulent business practices, a creditor’s attorney might be able to argue that you are personally liable.
Tort Actions. If you (or even an employee) acted in such a way that was extremely dangerous, negligent, or harmful; it could be argued that you are personally liable.
Didn’t read the fine print on loans or credit cards?
Here is the famous ‘always read what you sign’ advice. Unfortunately, when you sign up for a credit card and use it just for business purposes, or take on a special loan, make absolutely sure that the contract does not state you are personally liable for the charges. If you take on that responsibility, do so knowing that you are personally liable.
Spousal liabilities. If any of the above is true; your spouse might be jointly liable for all of the credit, in “Community Property” states.
Is the business still making decent money?
If the business is still making great money; it may be better to go with a negotiator, mediation, credit management. You might even have to hire a CFO, accounting firm, or specialist firm to help budget your business in such a way as to be able to pay back the debts without filing bankruptcy. If there is a unfair or crushing debts that you want to declare bankruptcy because of, but still keep your business open; you might want to talk to your business bankruptcy attorney about Chapter 13 instead.