If you are thinking about filing personal bankruptcy you may be concerned about the impact it will have on your small business. As with many bankruptcy issues the answer depends on your specific situation-in other words, there is no simple answer. The first matter that needs to be established is the kind of business you are running. There are three major categories that businesses fall under.

One is called a corporation. A corporation is an entirely separate legal entity. The corporation operates mainly as an independent person. It may own property under its name. You are considered to be a shareholder not an owner. Therefore you do not have any interest in any property that belongs to the corporation, except as a shareholder during liquidation. Any action of the corporation must be through an agent acting on the corporation’s behalf.

Another is called a sole proprietorship. A sole proprietorship is operated by you only. You have no partners and are not incorporated. You are the sole owner of the business.  You may have employees working for you under a sole proprietorship, and also may have a separate business checking account.  But legally, there is no difference between your business and you. You own all the equipment and are legally liable for any business transactions.

The final one is called a partnership. A partnership is when you are in business with someone else but have not formed a corporation or other legal entity. A partnership also may be treated as a separate entity. It may also hold property in its name. But, each partner is liable for the partnership debts.

So, how will filing personal bankruptcy affect your business?  As stated above, it depends on the type of business. If it is a sole proprietorship, your business debts are your debts.  There is no distinction.  If you have either too much business debt or too much personal debt you must include all of your debts. You are also required to disclose both your business and personal assets.

Keep in mind that if you do file personal bankruptcy your business creditors may be reluctant to extend any further credit to you. Also, any business property will be considered an asset of your bankruptcy estate and might be sold by the trustee to pay your creditors.

Usually if a sole proprietorship files bankruptcy, the business is shut down, particularly if you file under Chapter 7. But with careful financial planning it is possible to continue your business even though it has limited or no credit available.

If you are struggling with too much debt and are operating your own small business, please contact an experienced personal bankruptcy attorney. If you live in Denver, Aurora, Arvada, Brighton, Broomfield, Commerce City, Englewood, Highlands Ranch, Lakewood, Lafayette, Littleton, Northglenn, Westminster, Wheat Ridge, or Golden, Colorado please feel free to contact me for any consumer bankruptcy assistance you may need.

Kevin D. Heupel, Colorado bankruptcy lawyer

Phone: 303-955-7570

website: http://COBankruptcyHelp.com

email: help@cobankruptcyhelp.com

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