Going through the trials and tribulations of business bankruptcy is certainly not a shimmering experience of life. Most of the times, it’s a painful ordeal for an individual owner as well as his entire family.
The pain is compounded with the thought of losing home and the social stigma attached to it. However, not everyone loses their home during a business bankruptcy. If you are lying on the verge of bankruptcy and trying to protect your ‘sweet home’ by hook or by crook, you must be relieved to know there are ways to do it. In fact,
laws are in force to protect a certain amount of equity in a home in the event of bankruptcy. However it is best to opt for a debt management or debt consolidation services or a credit card debt consolidation if you have additional arrears on your credit cards, before things get really dicey to save both your home and life from a financial disaster of bankruptcy. Read on to know the following ways to spare your house from business bankruptcy.
Your first and foremost duty is to find the bankruptcy option that will cause less damage to your current financial situation. Both a business and an individual can file a Chapter 7 bankruptcy. A chapter 7 Bankruptcy generally requires complete liquidation of almost all the assets and allows limited exemptions, including the bankrupt’s home. Individuals can qualify for a Chapter 13 as well, which sometimes allows them to keep his secured assets, including his home. However, here the debtors have to make the monthly payments to cover the house note and the arrears spread over a time period agreed upon.
- Provided the filing is solely a business bankruptcy, there are chances to protect your home from being taken away. If the business is a corporation or a limited liability partnership, then the individual or the owner of the stock of the company won’t lose his personal assets, including his home. However, a sole proprietorship will be regarded as an individual bankruptcy, and therefore can put the home at jeopardy.
- You can take a few steps early to keep the home safe. If the business is established on a corporation or a limited liability partnership, then the personal assets of the business owner can remain protected during a business bankruptcy.
- Before the business is formed, if an individual passes on his home to another entity (like his spouse, children), in a trust and still maintain possession of the home, he may not have to lose his home at bankruptcy.
- Last but not the least, you can take advantage of the state and federal exemption laws as well. Under federal law in the event of a Chapter 7, a debtor can keep his home, only if the debtor has less than $20,000 worth of equity in his home, after bearing all expenses to sale the home. In a number of states, the debtor can opt to take the state exemptions, which in many cases exceeds the federal exemption as well.
To conclude, make sure, you consult with legal counsel before try your hands on any business venture, and adopt prior measures to keep your home protected in the event financial fortunes go adversely and bankruptcy is imminent.
If you are considering bankruptcy, contact Knoxville Bankruptcy Attorney Dan Scott
If you have a small business and are wondering where to turn, be sure to seek the advice of an experienced bankruptcy attorney. We help individuals and businesses from Knoxville, Sevierville, Maryville and Jefferson City evaluate the options available during these difficult times. Call and set up a free consultation with Knoxville Bankruptcy Attorney Dan Scott at 865-246-1050 today.
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