Personal Bankruptcy Vs. Business Bankruptcy In Colorado

For those filing bankruptcy, Colorado does offer exemptions that can protect personal bankruptcy filers from losing some of his or her property. However, when an individual owns a business, the lines of bankruptcy assets can be blurred. It is important to consider the benefit of filing business bankruptcy or filing personal bankruptcy instead. This will come down to the type of business you own and your assets.

Your Business and Personal Assets

Depending on the legal standing of a business, the business owner may not have a choice in whether to file personal bankruptcy or business bankruptcy. If your business is a sole proprietorship, there is no difference between your personal assets and business assets, under law. All of the business's debts and assets belong to the borrower. There is no division of how these debts are managed. It is difficult to treat business assets different from personal assets.

What can you do if you wish to file bankruptcy? There are several options to take into consideration under Colorado bankruptcy law.

To protect your business assets as much as possible, apply as much of the tools of trade exemption to those assets. Tools of the trade include any type of tools you need to do business. In Colorado, up to $10,000 worth of materials such as maps, machines, equipment, business materials and supplies can receive protection.
If you own a partnership, where you are a part owner in the business, and wish to file bankruptcy in Colorado, you can do so without worry. In some states, partner's assets can get in the way of filing bankruptcy (they may be seized by creditors.) In the state of Colorado, property of a business partnership is protected from bankruptcy liquidation.
If you wish to dissolve your business, but protect your personal assets, filing business bankruptcy is possible if you own a corporation or other legally recognized business. However, limitations apply in most situation.

The division of property in a bankruptcy between personal property and business property is a key factor to take into consideration when you file bankruptcy Colorado. Take into consideration the other exemptions that may apply to protect personal exemptions as well.

When to Hire an Attorney

There are numerous situations in which it is best to hire an attorney to file bankruptcy. The bankruptcy attorney can also provide guidance on how to determine if a business bankruptcy is necessary or if filing personal bankruptcy is the best route for your situation.

Think Bankruptcy Might Be for You?