Small Business Bankruptcy Lawyers in Texas
Protect Your Business & Avoid Litigation
- Avoid bankruptcy litigation
- Strategies to keep your business solvent
- Multiple options to restructure or get rid of debt
Small businesses fuel a significant portion of our economy and contribute to the growth and vitality of communities throughout the United States. But no matter how vital, beloved and well-run it is, any business can encounter financial issues that lead it to unmanageable debt.
For more than 15 years, our business bankruptcy attorneys at Leinart Law Firm have helped small businesses in financial distress find options to get rid of debt, avoid litigation and keep their businesses solvent.
Federal laws allow businesses to file for Chapter 7, Chapter 11 or Chapter 13 bankruptcy. Typically, businesses opt to file Chapter 7 or Chapter 11 bankruptcy. Depending on the structure of a small business or sole proprietorship, they may be able to file Chapter 13 bankruptcy. The type of bankruptcy that ultimately provides the most benefits depends on a number of factors specific to the business.
If you’re a small business owner, it’s important to consider your future plans when deciding which type of bankruptcy to file. For example, if you want to discharge your debt without a repayment plan and get a fresh start, Chapter 7 bankruptcy may be the best option for you. However, if you plan on continuing to do business, you may want to file Chapter 13 bankruptcy so you can maintain relationships with your vendors and suppliers.
Depending on the type of business and how it’s set up, you may be able to discharge your business debt in a consumer bankruptcy. Our Dallas business bankruptcy lawyers take a comprehensive look at both your personal and business finances and determine which options will best suit your specific needs. We can help you understand the benefits and limitations of your bankruptcy options so you can make an informed decision about how to proceed.
Fighting a lawsuit makes it difficult for a business to operate. There are myriad reasons why someone may take legal action against a business, including:
- Collection actions by a supplier for unpaid bills
- Contractual disputes
- Enforcement action by a governmental agency for a regulatory violations
- Patent infringement or other battles over intellectual property
- Internal conflict involving the other owners or investors in the business
If your business is already in a precarious financial position, a lawsuit can push it over the edge. Litigation can be costly, and if someone wins a major judgment against your business, it can lead to closing your doors for good.
When you file bankruptcy, an automatic stay is put on your debts. This means creditors must stop collection actions, including pending lawsuits or existing judgments against you. If you run your business as a sole proprietorship, your debts and claims against you can be discharged in Chapter 7 bankruptcy. If your business is structured as a corporation, an LLC or another type of entity, there are certain factors that can affect whether a judgment can be discharged. We understand that each case is unique. Our business bankruptcy attorneys in Dallas have helped thousands of clients throughout north Texas find the debt relief solutions that are right for them.
Your personal liability for business debt depends on the structure of your business. Here’s how:
- Sole Proprietorship – A sole proprietor is not a separate legal entity. This means you and your business are equally liable for personal and business debts.
- General Partnership – In a general partnership, each partner is considered a general partner and is personally liable for business debt.
- Limited Partnership – In a limited partnership, there is at least one general partner and at least one limited partner. The general partner holds personal liability for business debt. The limited partner does not.
- Limited Liability Partnership (LLP) – An LLP is designed to protect all partners from personal liability for business debts. However, in some states, liability protections apply only to negligence claims. All partners may still be personally liable for business debt.
- Corporation – Shareholders of a corporation typically have no personal liability for business debts. However, shareholders may be held liable if a creditor can prove that required corporate formalities were not followed.
- Limited Liability Company (LLC) – Owners of an LLC are not liable for business debt unless they have personally guaranteed the debt.
Our business bankruptcy lawyers consider the structure of your business and other factors when determining whether you’re personally liable for business debt.
There are a few ways a creditor or plaintiff may attempt to proceed with a lawsuit or collect a judgment after you file bankruptcy. They can request “relief from the automatic stay” to get the bankruptcy judge’s permission to continue the lawsuit or to collect on a judgment. However, if the claim or debt is dischargeable, their request will most likely be denied.
They could also file an “adversary proceeding” in bankruptcy court to object to the discharge of the debt or claim. However, these objections present significant legal and practical challenges. Grounds for non-dischargeability are very narrow and tough to meet. In addition, your adversary may have to prove that you engaged in fraud, material misrepresentation or other nefarious conduct that makes a valid debt or claim non-dischargeable in bankruptcy.
The means test applies to individuals whose debts are primarily consumer debts, not business debts. It requires those who have the resources to pay back all or a portion of their debts to do so. Typically, the means test is based on income. If your income is too high, you will not be eligible to have all your debts discharged in Chapter 7 bankruptcy.
However, If more than 50% of your debt is business debt, you may be eligible to file for Chapter 7 bankruptcy without doing the means test. For example, if you have a debt from a commercial lease that was broken, the unpaid lease payments for the projected term of the lease could significantly add to the amount of business debt you’re carrying. If you have more business debt than consumer debt, you may be able to skip the means test and discharge all your debts through Chapter 7 bankruptcy.
Bankruptcy law is complex. If you are considering consumer or business bankruptcy, our attorneys can evaluate your specific circumstances and help you understand the options that may be available to you. Our team at Leinart Law is committed to providing quality legal advice and developing an action plan to protect your business, whether that means liquidating assets to pay back creditors or implementing a reorganization plan to make your company profitable.
Whether you want to strengthen the financial stability of your business or you’re ready to move on to something new, our business bankruptcy lawyers at Leinart Law Firm can help you meet your goals. Call our Dallas office at 469-232-3328 or our office in Fort Worth at 817-426-3328. You can also complete the contact form on our website, use our convenient chat feature or email us to schedule a free consultation. We proudly serve clients throughout north Texas.