Can a sole proprietor file chapter 7 bankruptcy?

Chapter 7, or liquidation-style, bankruptcy, is probably the most widely-available type of bankruptcy. Essentially, anyone can take advantage of it. As the United States court system itself notes, “To qualify for relief under chapter 7 of the Bankruptcy Code, the debtor may be an individual, a partnership, or a corporation or other business entity.” As a sole proprietorship, your business would qualify as both an “individual” (since a sole proprietorship is the individual proprietor; there is no effective distinction between individual owner and business) and “other business entity.”

You can find the eligibility requirements for a Chapter 7 bankruptcy at 11 U.S.C. Sections 101 (41) and 109(b).

Therefore, if Chapter 7 is the right choice for you and your business, it is something you may do. It would be a good idea, however, to meet with and seek the advice of a bankruptcy attorney, who can guide you as to whether this, or possibly one of the bankruptcy forms, is truly the best option.