Do you have overdue small business debt?
Those of you with small businesses may be dealing with some debt as a result of the recession. The recession was tough on small business, but bankruptcy is a federal process that can also help you with your small business debt. Most small business loans are backed by your own personal credit history. Usually, a small business is run via personal credit lines. So, what can you do with bankruptcy that will help you get rid of business debt? Bankruptcy code makes it easier for you to qualify for bankruptcy when you are dealing with non-consumer debt. The one flexibility that you earn when you have used most of your debt for business is a qualification for a non-consumer debt bankruptcy filing which allows you to qualify for bankruptcy even if your income is higher than the median income limits of bankruptcy.
To qualify for a non-consumer debt bankruptcy, your debt structure needs to be more than 50% business debt. So, you will need to show the bankruptcy court that your debt allocations were used for business. Be ready to show proof of that in case the bankruptcy trustee asks for more detailed information on your business debt. If your business debt is 50% or more of the debt you are dealing with, you may be able to qualify for a bankruptcy even if your income is above the income qualifications for bankruptcy. Your local bankruptcy attorney should be able to evaluate this in more detail for you. Also, keep in mind that your home loan is considered consumer debt. If you have a home loan, you will need to factor it in to see if 50% or more of your debt is actually business related or not.
You may not need to shut down your business of corporation. If you are the personal guarantor of your business, you may be able to use bankruptcy to eliminate the business debt and then continue running the business if you think things are turning around in your business environment. Keep in mind, that a Chapter 7 bankruptcy can only be utilized once every 8 years. If you are going to use a non-consumer debt bankruptcy and continue to run the business, make sure it will not be another losing venture after the bankruptcy. As the personal guarantor of your business debt, you can file a bankruptcy under your own name and not the business to erase all of the business debt that is in your name.
A non-consumer debt bankruptcy is another method of qualifying for bankruptcy when you make too much money for the normal income limitations of bankruptcy and can be used even if you are the personal guarantor of the business debt.
Bankruptcy Law Professionals is a Southern California bankruptcy law firm with offices in Riverside and Orange County. We help clients with bankruptcy in all of Riverside and San Bernardino County as well as Los Angeles and Orange County. To schedule an in-person or phone consultation, we can be reached at 855 257-7671.