Assisting Businesses with Chapter 7 Bankruptcy in Cook, DuPage, and Kane Counties
Shutting down a business warrants careful legal attention to avoid unexpected personal liability for any outstanding obligations. Regardless of whether your business is currently facing significant financial difficulties, Chapter 7 bankruptcy can be a valuable tool for ending operations, liquidating assets, and compensating creditors.
With 30 years of legal experience as an Elgin Chapter 7 business bankruptcy lawyer, Jim Young can offer you and your partners the guidance needed to safely navigate what can be a complex process. He offers hands-on representation and has a complete understanding of how filing can be used to safely close a corporation, limited liability company (LLC), or partnership. Jim is also prepared to assist sole proprietors who intend to leverage Chapter 7 to erase qualifying debt.
Declaring Bankruptcy as a Corporation, LLC, or Partnership in Illinois
When a company files for Chapter 7 bankruptcy, its leaders are essentially establishing their intent to go “out of business.” A business organization cannot discharge debt through this method of relief, and it cannot continue to operate after the case is over. If you are interested in saving a struggling business, you will need to explore Chapter 11 bankruptcy.
Upon filing for Chapter 7 bankruptcy, your company must immediately cease all operations. A trustee will be assigned to your case and liquidate all business assets. Proceeds will be used to pay outstanding obligations, with some creditors receiving priority over others.
By using Chapter 7 bankruptcy, you offer your business's creditors complete transparency, which can help avoid allegations of fraud or impropriety. You will not be directly responsible for selling assets and repaying creditors. The bankruptcy trustee will have a fiduciary duty to handle these matters, and every step of the process will be documented.
You should be extremely cautious about proceeding with Chapter 7 bankruptcy if you have any personal liability for business debts. There are several ways you could become personally liable for your organization's obligations, and you should discuss your circumstances with an Elgin Chapter 7 business bankruptcy attorney before moving forward to ensure you understand the risks. There may be safer ways to shut down your business and settle debts if there is any chance you could incur personal liability for company debts.
Declaring Bankruptcy as a Sole Proprietorship in Illinois
When you operate as a sole proprietor, you do not have a separate business organization. You and your business are inextricably linked and are considered the same entity in the eyes of the law. This relationship extends to your company's finances, which are not separated from your personal finances.
As a sole proprietor, you can file for Chapter 7 bankruptcy without necessarily shutting down your business. You can also potentially discharge qualifying unsecured debts, including personal and business-related credit card debt. However, there are limited scenarios where this approach is practical.
Because Chapter 7 bankruptcy involves the liquidation of non-exempt assets, you can easily lose the equipment and property needed to run your business as a sole proprietor. If you run a service-oriented business (such as personal training, motivational coaching, or music lessons), this may be less of a concern. Regardless, do not assume that you will be able to exempt and keep business-related assets. A legal professional can advise how Chapter 7 may impact your company's ability to continue operating.