Filing for bankruptcy is a step that scares most people. It is something that people would turn to as a last resort. It is an extreme measure but it is one decision that would save you a lot of trouble in the long run. It is a decision you must consider if you are facing heavy debt.
Let us take a closer look at what does it mean to file for bankruptcy.
What is filing for bankruptcy?
A layman refers to being bankrupt as having no money. However, what a lot of people don’t realise that bankruptcy involves a legal procedure. This procedure helps a bankrupt individual or business manage their debts and enables them to repay the money they have borrowed.
Bankruptcy is usually imposed by a court order. The bankruptcy court can help protect you during the bankruptcy proceeding if you have sufficient evidence to show that you are eligible to be termed bankrupt.
It is a step that most people are hesitant to take but declaring bankruptcy is often an option that is necessary.It can also seem like an overwhelming and confusing decision. It is a step that can save you even if you are in the depths of ruins financially.
The rules for filing bankruptcy have changed in the past few years. If you live in Green Bay, WI http://mydebtadvisors.com/green-bay-office-location and have been considering to file bankruptcy, there are several bankruptcy attorneys that can guide you in the process.
Bankruptcy and its effects on small businesses:
Facing bankruptcy is a tough task and this may seem like an even more daunting task if you own a small business. Running a small business and maintaining it well is challenging. If you are facing hardships financially, it will add to the stress factor and the pressure bankruptcy brings can be enormous.
One of the most basic factors to find out whether bankruptcy would affect your personal credit is whether you are liable for the business debt personally. The kind of business you own or run would determine your responsibilities towards the business debt. Here are the most common kinds of businesses and how bankruptcy would affect each of them.
1. Sole proprietorship:
If you are the sole owner of the small business, then you would be responsible for all the business debt personally. In this type of business, the owner is also entitled for all the profits that the business makes. The owner and the business are considered the same and financially there is no distinction between the two.
If you would like to clear your debts, then you would need to file for personal bankruptcy. Doing so would affect your credit score. The effects of this would also be reflected in your credit report for a period of up to ten years.
2. Partnership businesses:
This type of business is owned by two or more people. Further there are two kinds of partnerships and hence that means different responsibilities for the business debt.
a) General partnership:
If you operate the business as a general partner, then along with the partnership you are also responsible for all the business debts. Since the business is owned by the partnership it can file for bankruptcy on its own.
The partnership property is liquidated to pay the partnership debts. If all the debts are not paid in this way, then the general partners would be responsible for the debt that is left unpaid. The creditors can also report these unpaid debts to the credit bureaus.
The good part is that since this kind of bankruptcy is filed by the business, it will not be shown on your credit report.
b) Limited partnership:
If you are a limited partner in a business then in most situations, you will not be responsible for the business debts. The business bankruptcy will not affect your credit and not show up in your credit report.
There may be a few exceptions where being in a limited partnership could affect your personal credit. Signing a personal guaranty or not paying certain business taxes are two such examples.
Filing bankruptcy in Green Bay, WI:
When you decide to file for bankruptcy, you would need to know the correct procedure to do so. You would also need all the information necessary about the various resources like services, lawyers and products so that the entire process can be made as simple as possible.
There are several bankruptcy attorneys in Green Bay, WI to help you make an informed choice. It is a great idea to hire the services of an efficient bankruptcy lawyer to firstly decide whether you need to need to file for bankruptcy or not. They can also help you in finding out the kind of bankruptcy you need to file for as well as where you would be required to file it.
Filing for bankruptcy at the right time and in the right manner is a decision that will surely help you get back on the right financial track.