While we like to think that our business finances and our personal finances are separate entities, the lines can become blurry when it comes to filing for personal bankruptcy. Will your business be able to operate normally? How will your personal finances be affected?
There are lots of questions that can come up when you are considering personal bankruptcy and you are also a business owner. The type of business that you own and the type of bankruptcy that you file, Chapter 7 or Chapter 13, will have the biggest effect on whether your business is affected by personal bankruptcy.
What can you do to lessen the effects on your business? There are a few things to keep in mind:
- Always provide full disclosure about your business. Don’t try to hide anything about your personal or business finances during bankruptcy. Any moves to store money, change ownership, or otherwise conceal your financial records may be considered fraudulent while your bankruptcy claim is processed.
- Determine whether your business has value and whether your assets could become a viable source of payment for your creditors during bankruptcy. Depending on the type of business you own, some of your assets may be seen as opportunities for liquidation, so your personal debts can be paid.
- Prepare for your business to be affected. Even though your business may not see any changes when you file for personal bankruptcy, you should always be prepared for a creditor to take an aggressive stance towards the funding that you have available.
By working with an experienced financial counselor during the personal bankruptcy process, you may be able to avoid pitfalls and better protect your business assets. At Morgan & Partners Inc., we can answer your questions and help you go through the process of filing personal bankruptcy. Contact us today to learn more.