When a Wisconsin resident has a business that failed, it is not uncommon for them to also have large amounts of debt. Many people who have struggling businesses will attempt to use credit cards or loans to keep their business going, and it is not uncommon for these individuals to also have trouble keeping up with payments to suppliers. The good news is that someone in this situation can file for Chapter 7 bankruptcy and it will eliminate most or all of their unsecured debt.
Whether someone files for personal or business bankruptcy will depend on what they owe and their agreement with their lenders. If someone has a large amount of credit card debt related to their business, it is not likely they have tied this debt to their home. However, many people who run businesses take out loans from the Small Business Administration, and they frequently require individuals to use their primary home as a security.
If someone is in a situation where their home is on the line, they may want to make their bankruptcy filing personal instead of business. This may be able to protect them from losing their home or other leveraged assets. Additionally, people can attempt to sell large or expensive equipment related to their business. This may enable people to pay off creditors that they have secured loans with and still file for bankruptcy for any credit card balances.
Filing for bankruptcy can be helpful to individuals who have more debt than they can manage, but it is a good idea for them to understand the filing process to ensure as much debt as possible is discharged. A lawyer may let someone know what to expect when they file and help them with their filing.
Source: Fox Business, “My Small Biz Failed. Should I File Bankruptcy?”, Justin Harelik, July 31, 2013
