Bankruptcy

Can I Include My Business Debts In My Chapter 7 Bankruptcy?

By Kevin Gipson, New Orleans Bankruptcy Attorney

I am seeing more and more small business owners that are in need of filing a personal bankruptcy?

In the case of a small business owner filing a Chapter 7 bankruptcy, the question I hear most often is whether the small business owner can discharge his business debts?

Generally speaking a small business owner can discharge his obligation on the business debts when he files a Chapter 7 bankruptcy.

In the purist sense, the small business owner is not discharging the business debt.  The small business owner is discharging his personal obligation to pay the business debt.

Even when banks lend to small business owners, it is rare that the bank will lend money to a small business without the owner personally guaranteeing the loan.

A Chapter 7 bankruptcy allows a small business owner to discharge his personal obligation to pay the small business debt:  The debt continues to exist, but the lender can only recover from the business, not the business owner.

Full post as published by Bankruptcy Law Network on January 19, 2010 (boomark / email).