Small Business Bankruptcy
In most cases an individual who owns a small business that has been incorporated does not need to file a business chapter 7 bankruptcy. The exception to this is if the owner has personally guaranteed debt associated with the business. Oftentimes lenders will require a business that is less than two years old, without a credit history, to have the owner(s) of the business personally guarantee the loan. If the business has personally guaranteed debts or the lease agreement, a bankruptcy may be the only option for the business owner to get protection from creditors.
In many cases filing a small business bankruptcy may actually cause more harm than good, for the business owner. A owner of a business has other options in Minnesota other than bankruptcy. The business can pursue a loan workout agreement from creditors, or go through a dissolution process that is controlled by Minnesota statutes. The small business owner in many cases maintains more control over the dissolution process by keeping away from the business chapter 7 bankruptcy. The small business can also elect to walk away from the business, if the business is a type that can be restarted easily under another business name.
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