Both individuals and business entities can file for Chapter 7 bankruptcy. If you’re a sole proprietor, both your business debt and your personal debt will be resolved in the same Chapter 7 bankruptcy case. Filing for Chapter 7 bankruptcy on behalf of the business doesn’t wipe out any debt whatsoever, however.

What happens to your LLC if you file personal bankruptcy?

If you are the owner of a corporation or LLC, a personal bankruptcy won’t erase your business debts, but it will remove your personal liability for them, which is the most important consideration.

What happens if I file personal bankruptcy for my business?

For starters, if you are sole proprietor, you and your business are one and the same, so personal bankruptcy will erase your personal and business debts. If you are the owner of a corporation or LLC, a personal bankruptcy won’t erase your business debts, but it will remove your personal liability for them, which is the most important consideration.

Can a small business file for Chapter 13 bankruptcy?

If the small business is a separate legal entity, like a Corporation or LLC, Chapter 13 will remove the owner’s personal liability from the business debt. This means that the filer won’t be personally responsible for paying the debt. However, the business will still be responsible for paying the debt.

Can a Chapter 7 bankruptcy solve your business debt problems?

Whether Chapter 7 personal bankruptcy will solve your business debt problems depends on a combination of factors, including the legal types of debt you have, how your business is legally organized, and the nature and amount of the personal assets you hope to protect.

Can a sole proprietor file a Chapter 7 bankruptcy?

If you’re a sole proprietor, you can file for either Chapter 13 or Chapter 7 bankruptcy. Either can be used for personal debts or business debts.