Changes in Bankruptcy for Small Business Owner Cases

Bankruptcy can be a difficult decision for any small business. There are a number of consequences associated with bankruptcy, including tax consequences that you may need to consider. For more help on the tax issues involved, I would suggest you consult with a small business tax attorney, Samuel D. Brotman or a lawyer within your own jurisdiction to help you mitigate any potential legal problems with the IRS.  However, when evaluating whether or not it is time for your small business to file bankruptcy, before you hire an attorney, it is important to know exactly what the requirements for bankruptcy are and how they impact you. These requirements differ slightly when a small business owner files for bankruptcy vs. a regular Chapter 7 or Chapter 13 debtor.

Here are some examples of how small business cases In small business owner cases, if the court makes the finding that there is enough information about the business in the reorganization plan then the debtor may not be required to file an additional disclosure statement related to the business. Also, to determine the classification of small business debtor, the debtor must pass a two-part test. The first part of the test requires that the small business debtor be participating in actual commercial activity. This means that the small business cannot be dedicated to passive income, such as owning real property. In addition, it is required that any liquidated debts, whether secured by a fixture or UCC filing or otherwise unsecured, must not exceed approximately $2,343,300. The second part of this test does not have to do with the business at all, but rather the creditors’ committee. If the creditors committee has already been appointed or if that committee is not active enough, in the court’s eyes to provide sufficient supervision of the debtor, than it will fail that part of the test. A qualified tax attorney or bankruptcy attorney can help explain the nuances of the test to your small business.

The small business debtor is required to submit with the petition a recently prepared balance sheet, a statement of operations, a cash flow statement, and the most recently filed tax return. The debtor is also required to submit a statement under oath explaining the absence of such documents and must attend court and the U.S. trustee meeting through senior management personnel and counsel. To meet ongoing filing requirements, the small business debtor must report information concerning the company’s profitability and projected cash receipts and disbursements, and must report whether it is in compliance with the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure and whether it has paid its taxes and filed its tax returns.

Knowing the nuances of the changes of in the bankruptcy code is important when considering bankruptcy as an option for your small business. For more information and specific advice, please speak with a qualified small business tax or bankruptcy attorney.

Know How to Handle Chapter 7 and Chapter 13

A lot of men and women around the U.S and in the state of Georgia have to make the hard decision every day of whether or not they should file for bankruptcy. For some, bankruptcy can be the last of a long list of options to help them achieve some form of debt relief, so that they can attempt to continue living their lives the way they did before their debt problem. For others, it simply doesn’t work out for them and they continue their foray into the deep, dark crevices of debt.

If you have found that you are considering filing for bankruptcy, have you thought about what chapter of bankruptcy you are going to file for? Do you know the difference between Chapter 7 and Chapter 13 bankruptcy? If not, continue reading below to find out.

Chapter 7 – When you file for Chapter 7 bankruptcy, you are more or less asking the court to discharge or get rid of a large amount of the debt that you owe. However, for this discharge to take effect, the bank or trustee can reposes or take any property that is yours and that is not on the exemption list (this differs in every state).  After the trustee claims your property, they can sell it or distribute it however they see fit.

Chapter 13 – Unlike Chapter 7 where you receive a discharge of your debt, Chapter 13 allows you to pay back the debt that you owe through a payment plan that lasts anywhere between 3-5 years. The amount of money that you have to pay back is determined by how much money you make at your current job, the kind of debt that you owe, how much debt that you owe, and how much property that you currently own.

If you think that filing for bankruptcy can help your debt situation, it’s always best to contact an Atlanta bankruptcy lawyer who can walk you through the complications and intricacies of both Chapter 7 and Chapter 13 bankruptcy. This way you can find which chapter best suits your unique needs, so that you can get back on your feet sooner rather than later.