Not all of the business owners that we here at The Law Office of Paul Petrillo help work their way through bankruptcy are hoping to reorganize their companies through a Chapter 11. Some are sole proprietors or small business owners buried under a mountain of both personal and business debt. If you are a small business owner facing the potential of filing for Chapter 7 bankruptcy, then you may harbor some hope of being able to re-establish your company once your bankruptcy has been discharged. That, however, may depend on your ability to retain your business assets.
If and when your small business is forced into bankruptcy, all of your business assets must be disclosed to the court. Unprotected assets may be liquidated in order to settle your liabilities. If these were to include your business assets, then your efforts to re-establish yourself on a firm financial footing after your bankruptcy may have already been sabotaged. Fortunately, both the federal and New Hampshire bankruptcy codes account for this, which is why they allow you to protect a certain amount of your business assets through the “tools of the trade” exemption.
New Hampshire law allows you to choose to follow either federal or state exemption guidelines. The Legal Information Institute from Cornel University Law School lists the federal tools of the trade exemption as being up to $1500 in value. The corresponding exemption for New Hampshire can be found in Chapter 511, Section 2 of the state’s Actions, Process, and Service of Process guidelines. Its value is listed at $5,000. Knowing how much of your occupational tools’ value you’ll be able to exempt may have a heavy influence on your decisions of which exemption guidelines to follow.
More information on asset exemptions can be found on our site.
