Personal Bankruptcy Vs. Business Bankruptcy In Georgia

When filing for bankruptcy in Georgia, individuals need to take into consideration all of their specific goals. Choosing to file either business bankruptcy or personal bankruptcy has to do with how you will protect assets during the process and the type of business legal standing you have. It is always advisable to work with an attorney while filing any form of bankruptcy.

Key Factors for Filing Bankruptcy in Georgia

When filing bankruptcy in Georgia, individuals need to take into consideration the type of business standing they have. The Georgia bankruptcy court system does not distinguish sole proprietorships and partnerships as official businesses. This means that the debts and assets in these types of businesses are not separate. If you have one of these forms of business, you are likely to face overlapping bankruptcy conditions.

If you wish to file personal bankruptcy with this type of business ownership, but you wish to protect your business assets, consider the following:

Georgia bankruptcy exemptions protect only a limited amount of business assets, such as tools and property.
Georgia does have a $400 wild card exemption available that may be applied to any type of property in the bankruptcy case. You can use this to protect some of your business assets.
The state does allow bankruptcy filers to apply any unused portion of the homestead exemption to any other type of property they may own, including business assets. The homestead exemption is $5000.
There is no specific protection for partnerships in the state. This means that a partner's assets may be considered in the bankruptcy.

In situations where the business is a LLC or corporation, the business and personal debts and assets are separate. In this situation, filing business bankruptcy will protect the individual's property from creditor's seizure. This may be the best route to keep the two types of bankruptcy separate. Businesses cannot receive a debt discharge, but can work through reorganization of the debts.

In other situations, it may be best to file Chapter 13 bankruptcy rather than Chapter 7. In this process, all assets are protected, but the filer must repay debts over a period of time. However, this is the best route to take when the business is a sole proprietorship or partnership and the filer wishes to protect some assets.

Hiring an Attorney

In the state of Georgia, filing business or personal bankruptcy is an option, but it is a complex process. Contact an attorney to ask questions and gather more information, especially when the goal is to protect as many assets as possible through the process.

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