We Help Small Businesses and Business Owners File for Bankruptcy in Missouri
Our Kansas City bankruptcy attorneys have experience helping small businesses and business owners file for Chapter 7 and Chapter 13 bankruptcy. Businesses and their owners can use bankruptcy protections to halt creditor collection attempts while potentially discharging debts.
If you are a sole proprietor or owner of an LLC or corporation, then Chapter 7 bankruptcy may wipe out your personal and business debts. Additionally, bankruptcy exemptions and the automatic stay may help business owners protect important assets. Below, our attorneys discuss how business owners can benefit from bankruptcy in Missouri.
Can Businesses File for Chapter 7 Bankruptcy in Missouri?
Certain businesses can use Chapter 7 bankruptcy. Whether Chapter 7 bankruptcy is a good option depends on the circumstances. In Missouri, the following business entities may file a case:
- Sole proprietors. When a business is a sole proprietorship, business and personal debts are treated as the same. Sole proprietors may wipe out their personal and business debts in Chapter 7 bankruptcy. Bankruptcy exemptions may allow business owners to keep assets needed to operate the business.
- LLCs and Corporations. LLCs (limited liability companies) and corporations can also file for Chapter 7 bankruptcy. However, they cannot receive a discharge for business debts. The Trustee would liquidate the assets and sell them to creditors to satisfy debts. Business owners would need to file individual cases to remove personal liability for remaining business debts.
- Business Owners. Chapter 7 bankruptcy can be used by business owners to wipe out debt for which the business owner is personally obligated. This protects the owner from personal liability for business debt in the future.
Can Businesses File for Chapter 13 Bankruptcy in Missouri?
Sole proprietorships may discharge business and personal debts upon completing a Chapter 13 bankruptcy. In a Chapter 13 bankruptcy, you pay off certain debts with a single repayment plan that lasts for three to five years. You would make payments to the Chapter 13 trustee, who would then distribute those funds to your creditors. At the end of the repayment plan, you receive a discharge on remaining debts.
Chapter 13 bankruptcy is often called a “wage-earner’s bankruptcy” because filers must have some type of income to complete the repayment plan.
You may be able to protect your assets by filing for Chapter 13 bankruptcy. An automatic stay goes into effect when you file for bankruptcy. Creditors cannot seize your assets or property while the stay is in effect. You may keep your property during the Chapter 13 bankruptcy. Additionally, you may exempt assets (up to a certain dollar amount) that are necessary for operating your business.
Contact our business bankruptcy attorneys for a consultation and we will explain Chapter 13 eligibility or other debt relief options.
Business Debts You Can Discharge in Bankruptcy
You cannot discharge all business debts in bankruptcy. Priority debts are generally non-dischargeable in bankruptcy and may include:
- Wages and salaries owed to your employees
- Contributions to benefit plans
- Certain income taxes
You must pay priority debts in full during a Chapter 13 repayment plan. Additionally, these priority debts are not discharged in a Chapter 7 and would still be owed.
Non-priority unsecured debt may include medical bills, credit cards, unsecured business loans, or, personal obligations on business debt. These debts are typically discharged in a Chapter 7 bankruptcy For a Chapter 13 bankruptcy, these types of debts might be discharged or paid, depending on the specifics of your case.
Do I Have to Take the Means Test?
You do not have to take the Chapter 7 Means Test if you have more business debts than personal debts. The Means Test would only apply if you hold primarily consumer debts.
Additionally, the Chapter 7 Means Test is not a requirement during a Chapter 13 bankruptcy. However, there are different income and debt eligibility requirements for Chapter 13. Contact us if you have questions.
Do I Need a Business Bankruptcy Attorney?
You should strongly consider working with a small business bankruptcy attorney. Depending on the type of business structure involved, you may need an attorney.
An attorney can help with filing requirements, creditor meetings and protect you from creditors. Business bankruptcy cases are also more complex than consumer cases. You may have a much more difficult time handling the process on your own. To learn more about how your business could benefit from hiring a bankruptcy attorney, we strongly encourage you to contact us.
Contact Our Business Bankruptcy Attorneys in Kansas City
Set up a consultation with us by dialing (816) 221-6006 or by using the confidential contact form on our website. We will answer your questions on Missouri bankruptcy laws. Troppito Miller Griffin, LLC bankruptcy lawyer Ryan Kiliany is a member of the Kansas City Bankruptcy Bar Association, the American Bankruptcy Institute and Western District of Missouri Bankruptcy Advisory Group.