Most people's small businesses in the Cleveland-area are too small to be worth anything to creditors, so with proper planning those people don't have to worry about having their business seized and sold in a personal Chapter 7 bankruptcy. However, people with valuable businesses that own land, paid-off vehicles, large bank accounts, accounts receivable and other assets need to be very careful when filing Chapter 7 bankruptcy because creditors may be able to seize the business and liquidate it to pay themselves.
Chapter 7 Bankruptcy - What Happens to Your Small Business
Even a simple case involving a very small business requires substantial planning to avoid creditor action. At court, the bankruptcy trustee will absolutely demand that you turn over any excessive funds in your business bank accounts despite the fact that you may not think of those as your property. Vehicles and tools may also be seized in some cases. Chances are your business needs to keep these things in order to continue functioning, but that is not the bankruptcy trustee's problem. His job is to collect as much as he can for creditors, regardless of whether it destroys your business.
Minimizing the Impact of Bankruptcy on Your Small Business
There are ways to minimize or sometimes eliminate any vulnerability your business has in a Chapter 7 bankruptcy. It can be as simple as waiting to file your bankruptcy on a day that your business bank account balance is very low. This kind of garden-variety pre-bankruptcy planning is considered legitimate, at least when there are small amounts of money involved. Transferring away large assets such as real estate and vehicles prior to bankruptcy is viewed with suspicion and in some circumstances can lead to your bankruptcy being permanently denied.
Contact a Cleveland Bankruptcy Attorney
Everyone's situation is a little bit different. The only way to know for sure how bankruptcy will affect your Cleveland business is to contact an expert bankruptcy attorney. If you have a specific question about how filing for bankruptcy will affect your small business, don't hesitate to give me a call.
