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Chapter 7 bankruptcy considerations for small businesses

While operating a small business in Hillsborough County allows you to dictate your own professional course, financial struggles may impact both your business as well as your personal life. Small business owners often come to us here at The Law Office of Paul Petrillo wondering if bankruptcy is the correct solution to their struggles, and if so, what form should they seek. A Chapter 11 case is often the preferred choice of partnerships and corporations. However, if your company is a sole proprietorship, you may find a Chapter 7 bankruptcy to be more advantageous.

Information gathered by the Small Business Administration and shared by the website SuccessHarbor.com shows that 50 percent of businesses fail during their first year. Thus, the financial struggles that your small business may be facing are not unique to you. Along those same lines, operating a sole proprietorship means that your business assets and debts are not considered to be unique from your personal ones. Thus, filing for bankruptcy under Chapter 7 may allow you to discharge your debts completely without having to first submit a reorganization plan to your creditors, which is required with a Chapter 11.

You should know, however, that with a Chapter 7 bankruptcy also may come the liquidation of some of your assets in order to pay back your creditors. That may include your business equipment, which you may want to retain should you continue to work in the same field. New Hampshire law does allow for exemptions up to a certain amount on business equipment, as well as a wildcard exemption to extend asset protection should you need it. You may want to research what these are before choosing to file.

More information on determining whether a business bankruptcy is your best option can be found here on our site. 

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Law Office of Paul Petrillo
One Tara Boulevard
Suite 200
Nashua, NH 03062

Phone: 603-635-4149
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