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Bankruptcy For Business Owners

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Small business owners who are weighed down by debt often have personal assets at risk. Learn about bankruptcy and other debt relief options, as well as which types of property can be protected from creditors.

Small business owners who are weighed down by debt often have personal assets at risk. Learn about bankruptcy and other debt relief options, as well as which types of property can be protected from creditors.

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Bankruptcy For Business Owners

  1. 1. Presented By Bankruptcy For Business Owners: Opportunities and Threats
  2. 2. Small business owners who get in financial difficulty face tough choices. At Lefkovitz & Lefkovitz, we are skilled at helping clients identify their debt relief options and take effective action. This action could be a bankruptcy filing or some other step, such as direct negotiation with creditors.
  3. 3. In this presentation we will discuss: Vulnerability of restaurantsand other smallbusinesses to cash flow problems Alternativesto bankruptcythat makesense for certaincircumstances Different typesof bankruptcyand how they workfor business owners Whathappens whena business owner personally guarantees loans Theadvantagesand possible downsideof Chapter 7 bankruptcy Whatpropertyyou cankeep and why exemptionsareimportant Waysour firm hascontributed to the law of Tennessee bankruptcyexemptions
  4. 4. Even successful small businesses are vulnerable to changes. The survival rate for businesses goes down markedly over time. Over the past decade, only about half of new businesses are still operating five years later. Restaurants, in particular, have been struggling in recent years.
  5. 5. Direct negotiation with creditors is sometimes possible to resolve debts without filing bankruptcy. It is necessary to determine, however, whether it is possible to turn the business around.
  6. 6. The most common types of bankruptcy are Chapter 7, Chapter 11 and Chapter 13. For businessowners, the choice usually comes downto Chapter 7 and Chapter 11. Chapter11 can beused to reorganizea businessby getting creditors to accept a repaymentplan.This generally makessense, however,only if it is feasibleto make the businessprofitablegoing forward. Chapter7 takescareof many unsecured debtsfor individuals. This is helpful for businessowners who mayhave personally guaranteedloans for the business.
  7. 7. Small business owners often have personal assets at risk because financing the business required giving personal guarantees for loans. But a Chapter 7 bankruptcy filing can get a business owner off the hook for many types of debt that are not secured by collateral.
  8. 8. A Chapter 7 bankruptcy filing allows for certain debts to be discharged without requiring repayment from future earnings. A business owner can start a new job or another business venture without having to pay back those debts. Chapter 7 only allows you to keep your assets up to a certain exemption level. This makes exemptions very important.
  9. 9. Chapter 7 generally can’t be used to discharge debts from child or spousal support, student loans or services obtained by fraud. Tax debt is separate issue with detailed rules on what can and can’t be discharged.
  10. 10. Bankruptcy is mainly federal law, but each state is allowed to choose whether to follow the federal system of exemptions or create its own. In Tennessee, only the state system of exemptions applies. Exemptions are especially important in Tennessee because Tennessee leads the nation in bankruptcy filings. There were more than 36,000 filings in Tennessee in 2015. This was more than twice the national average.
  11. 11. Attorney Steve Lefkovitz has handled numerous notable cases that have shaped bankruptcy law in Tennessee. One key case involved the homestead exemption. This exemption protects a certain amount of a principal residence from creditors. Mr. Lefkovitz’s published cases also include influential cases on alimony arrears and on fraudulent or questionable conduct by a debtor before a bankruptcy filing. Attorney Steve Lefkovitz
  12. 12. Free White Paper To learn more about your options as a small business owner for resolving debts and moving forward, please visit our website and read our white paper. ©2017 byLefkovitz& Lefkovitz.All rights reserved. Designandeditorial servicesby FindLaw,part ofThomsonReuters. Share the white paper

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