The federal government debate regarding the nation’s debt ceiling and staying power of the Affordable Care Act shut down more than Congressional legislation in October 2013. The shutdown closed national parks, zoos, museums, and the stateside military bases and personnel working for the government. The independent business owners who contracted to support government workers, as well as the supplemental small businesses built around local economies, have sharply felt the effects of this government impasse.
Several small businesses around Everglades National Park in Florida talked with news reporters about dwindling crowds and facing potential downsizing of employees. Some business owners have even discussed the possibility of personal and business bankruptcy.
Has your small business felt the impact of working in a post-2008 recession economy? If the government shutdown has affected your business, you may be considering the possibility of declaring personal bankruptcy. Depending on the type of business entity you have, bankruptcy may be the best solution to resolving mounting debts and loss of income stream.
In bankruptcy, a partnership or sole proprietorship would be treated the same as though it were an individual. Having a limited liability company or other corporation would mean that the business’ insolvency would not be attributable to the owner. While it is possible to avoid personal bankruptcy when one’s business faces bankruptcy, many small business owners may still choose to do so because their own personal property has been heavily invested into business capital.
A business is eligible for Chapter 7 or Chapter 11, depending on the type of income stream the business has. Like Chapter 11, a personal bankruptcy under Chapter 13 offers a restructuring of debts where there is an existing and stable income stream. See this article for a good overview of the difference types available to small businesses.
For a more in-depth perspective on personal and business bankruptcy, contact an experienced Anchorage, Alaska bankruptcy attorney.
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