Understanding Business Bankruptcy & Your Other Options
At Fraley & Fraley, Sacramento Bankruptcy Attorneys, Gary Fraley Esq. sees a lot of businesses with debt problems due to loss of income or lack of enough money to keep a business open until the income improves. In some cases the business is salvageable despite a lot of business debt, sometimes not.
We have saved hundreds businesses and helped them fix their debt problems. Gary Fraley Esq. and the Fraley & Fraley, Sacramento Bankruptcy Attorneys law firm are the “go to” bankruptcy attorneys for business debtors.
Unfortunately, the Sacramento Metropolitan Region has had the highest business failure rate of any area in the whole country.
A large portion of our business is representing small and medium size businesses with serious debt problems. Our business clients cover the whole range of business.
Examples of Fraley & Fraley, Sacramento Bankruptcy Attorneys clients include significant numbers of:
- real estate and mortgage brokers and agents,
- care homes,
- auto dealers,
- automotive repair shops,
- trucking companies,
- retail stores,
- mail box stores,
- rental property owners,
- service stations,
- janitorial services,
- farmers, and
just to name a few.
Not only do we file Chapter 7 and Chapter 13 business bankruptcy cases, when it is to our client’s advantage to do so, we negotiate settlements with business creditors like landlords, franchise companies, sub-contractors and venders.
Sometimes we recommend a Chapter 7 business bankruptcy. Other times we recommend a Chapter 11 bankruptcy or Chapter 13 bankruptcy cases) of the business. In fact there are Nine Options for Businesses with Debt Problems to consider.
Sole Proprietorship Business Bankruptcy & Owner Personal Liability
The owners of a Sole Proprietorship business are personally liable for all debts of the business. A business bankruptcy is, by definition also a personal bankruptcy. Everything you own is in play in a sole proprietorship as is all your personal debts. Remember that you are a “dba” and “doing business as” a trade name. An example of that would be that our business was a sole proprietorship for more than 30 years doing business as “dba” Fraley & Fraley until it was incorporated.
Sole Proprietorship business owners have all options, Chapter 7 bankruptcy, Chapter 13 bankruptcy reorganizations, debt negotiations are available to Sole Proprietorship business owners. Chapter 11 bankruptcy debt reorganization also available but is usually not needed as there are better options and is way too expensive for the average Sole Proprietorship business.
Partnership Business Bankruptcy & Owner Personal Liability
Owners of Partnership businesses may or may not be liable for the debts of the partnership.
If they are the “General Partner” than the owner or co-owner of the partnership business is liable for partnership debts.
A person who is identified as a “limited partner,” in the partnership, who invested money but has no actual involvement in the operation of the business, is not liable for partnership debts. However they can have personal liability for partnership debts if they personally guaranteed a creditor that, if the business does not pay a debt, they would. This is the biggest problem people have with Partnership business debts.
Corporation Business Bankruptcy & Owner Personal Liability
Owners of Corporations and Limited Liability Companies are supposedly not liable for the debts of the Corporation. Unfortunately, other than huge corporations, most banks, vendors, landlords and other companies typically are going to require the personal guarantee of the owners.
If you have a Small Business Administration loan “SBA loan,” it is almost certainly personally guaranteed by you.
The tools we use depend on the unique nature of each business and the desires of the small business owners.
There are many other situations in which a person can be liable for debts of a business that are too complex to cover on this page.
Check out our Nine Options for Businesses with debt problems for a more detailed list of choices and considerations for business debts. A business bankruptcy may not be your only option.
Businesses with debt problems need the help of a Specialist in dealing with business debts. Too much is at stake in these situations (such as asset planning and protection) to hire the veterinarian’s assistant to save a few bucks when what you really need is a brain surgeon. Gary Fraley Esq. is a California State Bar Board of Legal Specialization Bankruptcy Law Specialist.
When others say “it cannot be done” see us. Often it is a matter of how creative the attorney is in finding a solution crafted to your needs.
Call Fraley & Fraley, Sacramento Bankruptcy Attorneys NOW at (916) 485-5444 or click the “contact us” on your screen to schedule your free consultation with a bankruptcy attorney who knows how to solve business debt problems, whether by a business bankruptcy, bankruptcy reorganization or business debt negotiation.