Houston Business and Personal Bankruptcy
The decision to file for business bankruptcy is never easy, even with the number of filings on the rise due to our country’s current economic crisis. We are here to explain your legal options and help you achieve a fresh start if you qualify for Chapter 7.
For Texas business and personal bankruptcy case representation,
call 281-531-0902. We give free phone consultations.
Among Texas business and personal bankruptcy options, the most popular is Chapter 7. After filing, the court appoints a trustee. This trustee has two responsibilities: liquidating the non-exempt assets of your company, and distributing the proceeds among the creditors.
- Filing Chapter 7 takes less time and is generally less expensive than Chapter 11. (A Chapter 11 debtor usually proposes a plan of reorganization to keep their company alive and pay creditors over time.)
- Chapter 7 is generally a good choice for small companies where the owner’s personal finances are significantly impacted.
About 20 to 40 days after filing your business bankruptcy petition, you must attend the first meeting of creditors, also known as the 341 meeting. The trustee will ask you questions about your company's assets and liabilities, and its income and expenses. Your creditors may also attend the meeting and ask you questions about your company's financial condition. If your company does not have any assets, the case will end in about three or four months. If your company has assets, when your case ends will depend on how long it takes the trustee to gather your assets, sell them, and distribute the proceeds to your creditors.
Because most small companies are unincorporated, debts are the personal liabilities of the owner. Lending to those small companies is legally equivalent to lending to their owners. If the company fails, the owner is likely to have large business debts that legally are personal debts.
A Chapter 7 business bankruptcy, whether for the individual or a corporation, may be the best choice when:
- The company has no future.
- It has no substantial assets or qualities that cannot be reproduced after bankruptcy.
- The debts are so overwhelming that restructuring them is not feasible.
- Individuals can get a discharge of the dischargeable debts and a chance to start over.
The Chapter 7 procedure of current U.S. law provides two important protections for owners of small companies who are faced with debt:
- Future earnings
- Current assets
First, owners of failed companies can file for personal bankruptcy, in which their unsecured personal and business debts are discharged. Their future earnings are exempt from the obligation to repay debt, so they can start new companies or take jobs working for others without having their future earnings taxed to repay their debt. The future earnings provision — referred to as the fresh start — applies uniformly throughout the United States.
Second, small business owners must surrender current assets that are above an exemption level set by the state in which they live. The non-exempt assets, in turn, are used to repay debt. Because the exemptions vary by state, states with higher bankruptcy exemptions are more attractive to entrepreneurs.
Texas is one of the most liberal exemption states. The Texas personal property exemption for a single adult is $30,000, and for a family is $60,000.
Our attorneys will help you with every step involved in the business bankruptcy filing process. Texas business and personal bankruptcy is our specialty, and our goal is to help you successfully obtain an unchallenged discharge and to achieve debt liquidation and relief.
Call The Law Offices of Mark A. Sanders if you are considering business bankruptcy in Houston, Katy, West Houston, Sugar Land, Stafford, Jersey Village, West University, and Piney Point Village.