In today’s current market business owners are faced with numerous challenges from finding employees to drastically increased costs. They are faced with the question of whether they will be able to continue their business or whether it’s better to close it.
That is a very personal decision since so much goes into starting and sustaining a business. There are several factors we look at in making that determination.
Are there any business assets such a commercial building, inventory, or equipment that should be liquidated to pay your creditors? Your assets cannot be sold or transferred for your benefit at the expense of paying your creditors. Even transferring assets to a new business venture can disqualify you from filing bankruptcy so its very important to consult with an attorney before making any decisions on the proper steps to close your business. Another issue is whether the debt is exclusively in the business name, did you personally guarantee the business debt, or did you use your personal credit lines to fund your business?
In most cases, there is a personal guarantee on business debt and personal credit cards are used to keep the business afloat. If the majority of your debt, is non-consumer or business-related then you would qualify for a Chapter 7. Again, it is important to seek the advice of an attorney to determine which Chapter type you would qualify for under the bankruptcy code.
Many times, if the business has no assets and will be closed then it can just be administratively dissolved without the need to file for bankruptcy. Another issue also is whether there are any outstanding account receivables, do you reasonably expect payments in the future, or expect any reoccurring income? There is also a potential that that could be collectable by the trustee if you are filing a business bankruptcy.
All of these factors need to be considered whether determining whether to file a business bankruptcy or a personal Chapter 7 or 13 bankruptcy.
Whether you are married or separated, you can still file for bankruptcy on your own. There is no requirement that your spouse file for bankruptcy.
Chapter 7 or Chapter 13 Bankruptcy?
If you are married and maintaining the same household, then the trustee will consider your joint income to determine if you are over the median income qualifications for a Chapter 7 bankruptcy or to determine what you are financially able to repay in a Chapter 13 bankruptcy.
If you are separated and maintaining separate households, you expenses should also be listed separately.
Contact Gina Rosato Law Firm, P.A. to discuss your Bankruptcy Options
Your divorce decree is a contract between you and your ex-spouse. This is completely separate from any contractual obligations you have with your mortgage lender or your credit card company.
Therefore, if you have a joint debt, even though your divorce decree says your ex-spouse will assume all the debt, your creditors can still come after you for the debt. For example, suppose you and your ex-spouse had a joint credit card with Bank of America for $20,000. During your divorce, your spouse assumes payment of the $20,000 debt. Your ex-spouse does not make a payment on this debt or files for bankruptcy. Bank of America can come after you for the $20,000 debt. If this happens you would need to pay it or file for bankruptcy. If you end up having to pay a anything to Bank of America you would have a cause of action against your ex-spouse once you have re-paid the creditor. If you and your spouse have significant amount of joint debt, it maybe beneficial to consider bankruptcy prior to filing for divorce to resolve these issues that may cost you more down the road in payments to creditors and additional attorney fees.
Contact Gina Rosato Law Firm to discuss your Bankruptcy Options
It is common for a bad financial situation to spiral into marital discord. One spouse may incur a significant amount of debt, fail to work for an extended period of time, or does not consult the other spouse when making purchases on joint accounts.
Divorce and Bankruptcy
If you and your spouse have a significant amount of joint debt it may be best to entertain bankruptcy as an option prior to filing for divorce. Bankruptcy is a much cheaper alternative to racking up a large bill with a family lawyer to argue about who is going to take over which debts when both people may be able to get rid of all the debt.
Furthermore, your spouse cannot assume your debt in a settlement agreement. For example, if you have a joint judgment against you from Company A for $50,000 and your divorce decree says your spouse should assume all debt from Company A. Company A can still pursue you for the debt despite what your divorce decree says. You would then have to sue your spouse to recover what you paid Company A. Therefore, if both spouses owed money to Company A, that could have been discharged in a bankruptcy, that would obviate the need and expenses to file suit against the other spouse for collection of debt after the divorce is finalized.
Contact Gina Rosato Law Firm to discuss your Bankruptcy Options
Whether you are married or separated, you can still file for bankruptcy on your own. There is no requirement that your spouse file for 
Your divorce decree is a contract between you and your ex-spouse. This is completely separate from any contractual obligations you have with your mortgage lender or your credit card company.
It is common for a bad financial situation to spiral into marital discord. One spouse may incur a significant amount of debt, fail to work for an extended period of time, or does not consult the other spouse when making purchases on joint accounts.
