Filing Bankruptcy as a Sole-Proprietor

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A personal chapter 7 bankruptcy does cover sole proprietorship. A sole-proprietorship is just another name a debtor will use for a business. A person who files for individual bankruptcy will normally list their company name as, “dba.”

Chapter 11 is aimed at relieving business debt and is filed by the business owner. The petition that is filed consists of a list of assets and financial obligations. The debtor may act as his/her own trustee. This process is called a debtor in possession. The court can then appoint a trustee if mismanagement is suspected.

Much like chapter 7 or 13, the debtor makes a consolidation plan that they must adhere to, in addendum to this; the debtor has a disclosure statement from the required. These statements explain their reason for filing and the financial state of the company. This form must cover the following:

  • Prior financial history
  • Cause for filing
  • Treatment of creditors
  • Liquidation of assets
  • Projections of financial earnings
  • Tax liens
  • Income and expenses

Unlike the other chapters, chapter 11 there are no limits to the amount of debt an organization may have to qualify. If for any reason your business is having financial difficulties, contact an experienced chapter 11 attorney.  This attorney can assist you deciding if filing a chapter 11 is the alternative you want to choose.

A chapter 7 or chapter 13 can cover a personal or business debt. It is recommended that if you have a well-organized business, file a chapter 7. However, it is recommended that you file a chapter 13 for the principal owner.

A personal bankruptcy case is filed by a petition. In addition, you must file a statement of your assets and liabilities. There must also be a list of your creditors. Before deciding on the right action you will take, review the list of different types of bankruptcies you can file. You want to get it right the first time so you don’t file for the wrong type and it costs you more time and debt.

When filing for bankruptcy, there is a fee. The amount differs depending on the type of bankruptcy you file.

  • Chapter 7 - $200 ($170.00 filing fee plus $30.00 noticing fee)
  • Chapter 13 - $185 ($155.00 filing fee plus $30.00 noticing fee)

The fees are the same even if filing jointly with a spouse. If you have any questions about any of the fees, please contact a bankruptcy attorney for a free consultation.

Bankruptcy will not clear the following debts owed:

  • Money owed for child support, alimony, fines and some taxes;
  • Any debts not liste4d on your bankruptcy petition;
  • Any loans gotten while giving false information to a creditor;
  • Debts resulting from willful and malicious harm;
  • Student loans owed to a school or government body; except, unless the court decides it will be an undue hardship; or
  • Mortgages or any other liens which are not paid in the bankruptcy case. However, bankruptcy will wipe out any obligation to pay additional money if the property is sold by the creditor

One can file for bankruptcy chapter 7 every 6 years. There is no time limit on filing again for a chapter 13.

There are two types of personal bankruptcy:

  • Chapter 7 - This type involves liquidating your assets and turning them over to the court.
  • Chapter 13 - This type of bankruptcy is filed by the debtor. This debtor must have valuable assets, such as a house and the customer wish to keep their home, but are not covered by state or federal exemptions.

Below you will find the most asked questions about chapter 7 personal bankruptcies:

  • Will my creditors stop harassing me?
  • Will my spouse be affected?
  • Will I ever get credit again?
  • Who will know?
  • Does it cost, and if so, how much?

Remember, before filing for any type of bankruptcy, be sure it is your last resort. Do your research and speak with a professional before making your final decision.