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Business debt can prompt individual filings in NH, 24 in June

Bankruptcy provides financial relief to both businesses and individuals. Under the most basic explanation of the bankruptcy process, businesses or individuals who seek relief have two options: straight bankruptcy involving liquidation through Chapter 7 protection or reorganization by way of Chapter 11 for businesses and Chapter 13 for individuals.

It seems simple enough, right? Well, we all know that life can be complicated and choosing a bankruptcy course is not always as simple as the description above seems. There is not always a direct line between professional and personal life. For many business owners, the debts occurred in their professional life can have an effect on their personal finances as well. Even bankruptcy statistics are not always clear about the distinction.

The New Hampshire Business Review found that there were 24 business-related bankruptcies filed in June. It seems significantly high compared to the past several months in which the filings were reported in single digits. It is enough to make people worry about financial instability, but the stats are not what they seem. 

The statistics from prior months failed to include personal bankruptcies that were sought as a result of business debts because only the individual's name was listed, not the reason for filing. For example, the owner of a construction company filed for Chapter 13 protection this past month as an individual, but it was business-related debts ranging somewhere between $100,000 and $500,000 that actually promted the filing. 

So how does an individual with business-related debt know whether Chapter 7, 13 or 11 is best? This is where an attorney can step in and make all the difference, providing individualized advice based not only on a deep understanding of the complexity of the process but on experience as well. 

Source: New Hampshire Business Review, "24 June bankruptcies in N.H. due to business debt," Bob Sanders, July 12, 2013

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