Closing down a business due to financial difficulties can be a complex process, especially when it comes to the unpaid debts of a sole proprietorship business. If you are getting ready to close your business and will not have enough money to pay all its debts, you may want to talk to a lawyer that specializes in business law to help you determine how to handle this event. Here are two things you should know about this.
Sole Proprietorships Are Not Separated From Personal Assets
If your business was operating as a sole proprietorship, your creditors will actually have the right to come after your personal assets if you owe them money. This is not the case with other types of business structures, and it is one of the disadvantages of running a sole proprietorship.
Because of this, it may be important to try to find ways to avoid losing your personal assets when you dissolve your company.
Ways To Avoid Losing Your Personal Assets
Before you close your business, you should hire a business lawyer for help. Your lawyer will want to first find out what your financial position is. This will include listing all your business assets with their values, as well as all the debts you owe. This will help the lawyer determine if you will be left owing money after you close down.
If you can sell all your assets and pay off all your debt, there will not be a problem, but this is not usually the case. Typically, after selling all business assets and using the money to repay debts, a business will still owe money.
If this is the case, your lawyer may suggest contacting each creditor to work out a modified plan. Creditors may be willing to accept lower amounts in cases like this. If your lawyer is successful with this, you may not have to worry about losing your personal assets.
If your creditors will not work with you on this, your lawyer may suggest filing bankruptcy. This would eliminate all these debts, and it may help you avoid losing the things you own personally, such as your house, bank account, and car.
Every case is different when a business closes, but a business lawyer might be able to help you handle this closure in the best way possible. To learn more about this, contact legal professionals like Souders Law Group today.Share
18 November 2015
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