Sole proprietorships, unlike corporations or limited liability companies, are not separate entities from their owners.
This can cause problems, because creditors who sue to recoup losses to you won’t be recovering them from your business, but from you personally.
Your home, car, and money in your personal accounts is fair game if there is a judgment against you resulting from business dealings.
Because of this, owners of sole proprietorships file for personal bankruptcy under Chapter 7 or Chapter 13.
Under Chapter 7, you risk losing business property, which is not exempted, but the advantage is that once your non-exempt property is sorted by a bankruptcy trustee, business debts owed to vendors and suppliers, as well as credit card debt, are wiped clean.
The attorneys at Zelenitz, Shapiro & D’Agostino can help protect you and your business through a bankruptcy.
Call us today at 718-599-1111 for a free consultation.