Real Solutions And Honest Advice For Over 25 Years

Small business owners also file for Chapter 7 bankruptcy

| Dec 21, 2015 | Chapter 7 |

Some New Jersey businesses are run by one individual doing business as the company. When the company is in financial trouble, the individual is often found liable for the company’s debts. Many of these small business owners will file for Chapter 7 bankruptcy in an attempt to rectify their financial situations.

A woman running a tour company recently filed for bankruptcy protection after her business was named as a defendant in three civil complaints. All of the plaintiffs in those cases claim that they were due a refund from the woman’s business that they never received. The individuals had booked trips, and when they were cancelled, they believed they were due a refund.

Now that the owner of the touring business is in bankruptcy, one of the three cases was closed. The other two are subject to the stay of execution that went into effect when the Chapter 7 was filed shortly before a hearing on the civil cases, which were combined by the court. This is often considered to be one of the primary benefits of filing for bankruptcy protection. The hallmark of a Chapter 7 bankruptcy is liquidation of assets in order to pay creditors. This means that any property that does not fall under one or more exemptions will be sold and the net proceeds used to satisfy a company’s existing debt.

New Jersey small business owners who are sole proprietors and doing business under a company name could be personally liable for any claims against the business. In certain circumstances, filing for Chapter 7 bankruptcy might also relieve the individual owner of liability for the debts incurred by the business. Undertaking this endeavor, however, can quickly become complex without proper support. It would be beneficial to enlist the aid of an attorney familiar with the bankruptcy process.

Source: wowt.com, “Operator of Former Tour Business Files for Bankruptcy“, Mike McKnight, Dec. 9, 2015