Should you file business bankruptcy or personal bankruptcy if you live in Tennessee and own a business? When filing for bankruptcy in Tennessee, it is critical to understand all of the options available to the individual. In both of these circumstances, it is critical to take on the type of bankruptcy that is going to offer you the best financial outlook. When a bankruptcy trustee is considering the financial future of the filer, the trustee is considering what would be the best route for that individual to take in terms of assets and debts.
Filing Bankruptcy in Tennessee
For those considering these options, it is critical to take a look at Tennessee law and the options available to you. There are several key things to keep in mind. Before you determine what type of bankruptcy to file, consider several key factors that distinguish these types.
- Business ownership and legal entities define the options available. Those who own corporations, LLCs and other sizable businesses may be unable to file personal bankruptcy and include business debts. However, in situations where the goal is to keep these two separate, this is a good route to take.
- Personal bankruptcy and business bankruptcy are intermingled in most sole proprietorships. Since the business does not have its own legal entity, it is not formally recognized by the bankruptcy court as a standalone creditor, under Tennessee law. Therefore, if you file either type of bankruptcy, both personal and business assets and debts are handled together.
- For small businesses that have limited assets, there is some protection in situations of filing personal bankruptcy. Tools of the trade is one type of exemption available. In the state of Tennessee, implements, books and tools related to the business are protected up to a value of $1900. Another $4000 worth of personal property can be applied through the wild card exemption.
- In cases of partnerships, where two or more people have a vested interest in the business, there is an exemption for property of business partnerships.
Individuals should take into consideration the options available to them carefully. In some cases, filing for Chapter 13 bankruptcy may be necessary to protect business assets in a personal bankruptcy. At the same time, business bankruptcy does not allow for discharge of debts as personal bankruptcy does.
When to Hire an Attorney
The division of property under Tennessee bankruptcy code can be challenging. It is best to use an attorney when filing for bankruptcy in Tennessee to help organize property and debts properly.