Business Debt in Bankruptcy

Napa and Santa Rosa Bankruptcy Attorney Ellyn M. Lazar Can Help

Photo of chapter 13 bankruptcy
Small business owners often become overwhelmed with debt incurred for the operation of their business. Santa Rosa and Napa bankruptcy lawyer Ellyn M. Lazar has assisted small business owners in resolving their financial problems for nearly 30 years.

Keep Your Business with Chapter 13

Although only individuals can file Chapter 13, individuals who are owners of businesses such as corporations, or who are members of partnerships or LLCs, may also file for protection under Chapter 13. In a Chapter 13 plan, business debt can be paid over a period of three to five years. In some situations, not all debt is required to be paid in full. Most debt not required to be paid in full will be discharged or forgiven upon the completion of the payment plan.

Filing a Chapter 13 bankruptcy for a business owner will:

  • Immediately stop all collection activity including harassing telephone calls and letters, bank levies, repossessions and foreclosures
  • Protect business assets from creditors
  • Allow the business owner to continue his or her business operations
  • Eliminate personal guarantees for business debt and most business debt
  • Provide a payment plan for delinquent business taxes such as payroll taxes or sales tax
  • Allow the business owner to assume (retain) or reject (terminate) a lease or contract
  • Reduce the monthly payment, interest rate and/or loan balance for business equipment debt

Manage Business Tax Debt in a Chapter 13

Filing Chapter 13 bankruptcy offers benefits for business owners owing delinquent taxes:

  • Allows payment of nondischargeable tax debt, such as payroll and sales tax, over a period of three to five years
  • Stops most interest and penalties from accruing on tax liabilities
  • Discharges (eliminates) older tax liabilities, such as income tax, sales tax and certain payroll taxes

Closing Your Business Without the Burden of Debt

If a business must be closed, a business owner may do so, free from most debt, by filing a Chapter 7. Unlike a Chapter 13, not only may individuals file Chapter 7, but corporations, partnerships and LLCs may also file Chapter 7.

Filing Chapter 7 bankruptcy for a business owner will:

  • Immediately stop all collection activity including harassing telephone calls and letters, bank levies, repossessions and foreclosures
  • Eliminate personal guarantees for business debt and most business debt
  • Protect personal assets of individual business owners
  • Allow the business owner to reject (surrender) a business lease

Representing Small Business Owners for Nearly 30 Years

Santa Rosa and Napa bankruptcy lawyer Ellyn M. Lazar takes the time to fully explain bankruptcy in California and how the process can provide relief to her clients. From her experience gained while assisting business clients for nearly 30 years, she understands the financial and emotional struggles business owners face. If you would like to have your bankruptcy questions answered by an experienced small business bankruptcy attorney, contact Ellyn M. Lazar today for a free consultation.

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