Pasadena Business Debtors Get Less Scrutiny for High Debt Amounts
A recent Los Angeles Bankruptcy Judge made mention to me of the fact that if you have filed Bankruptcy as an Individual and you have unsecured debts over 100K, you will be looked at far more carefully than if you file as a business. It seems that a Business is presumed to be capable of running up far higher debts than an individual and still remain "responsible" under the scrutiny of Bankruptcy Courts. Many business owners know that Bankruptcy is inevitable, but are unsure whether they should file as individuals or as a business, especially if they have personal guarantees on their debts or they are a sole propietorship.
As an individual, another difficulty in filing a Chapter 7 Liquidation Bankruptcy is that you have to pass the means test, which will hold you to not being over the median income for your State in order to qualify for a complete discharge under Chapter 7. However, if you claim that more than half of your debts are for business purposes the Means Test is assumed to be passed. This is just one of the many subtleties that an experienced Bankruptcy Attorney can provide to those thinking about declaring Bankruptcy that own a business.
If you are unsure whether to file a Bankruptcy, and if you should file as an individual or as a business, contact the Law Offices of Frazee/ Laron for a free consultation. A fresh start is just a phone call away.
