I run a small business. If I file chapter 7 bankruptcy, will I lose the business?

Maybe.

I know one longstanding bankruptcy trustee here in Utah who has told me repeatedly that if you are running a business, you’d better file a chapter 13.  If you file a chapter 7, he considers it his duty to shut it down and liquidate the assets.  In practice, however, it’s not that simple.

It really depends on the kind of business, and this really, really needs an independent attorney review to tell you if you are okay or not.  If your business is a home-based seamstress business, you’re not going to lose it unless you have some amazing quilting machinery worth more than the $5,000 exemption.  On the other hand, if your business is managing your $10,000 a month income stream from a group of Nu-Skin renewals, then the trustee might take those assets off and sell them, leaving you with nothing.  In the middle is a lawn care service.  You may lose the trucks and equipment if you have employees, or you may be okay if it is just you and a trailer with your single lawn mower and weed eater.  business sale

Basically, you may be okay, or you may lose everything, and it’s hard to answer except on a case-by-case basis.

 

 

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