Many people begin operating a business on their own without formally creating an LLC or corporation with the state. This is called operating a sole proprietorship, and there are benefits to doing so, such as no filing requirements and simple pass-through taxation. However, in exchange for these benefits, sole proprietors receive no protections from personal liability for the debts of the business. If you are a sole proprietor, business debtors can come after your personal property (including your home) and assets to seek payment for unpaid debts and contracts.
With the COVID-19 pandemic and economic shutdown of 2020, many sole proprietors have unpaid business debts, and they are facing the possibility of losing their personal assets. If you believe it is time to close your business and settle remaining debts, Chapter 7 bankruptcy can be a highly beneficial solution.
As a sole proprietor, your business and personal debts are one and the same. When you file a Chapter 7 bankruptcy case, you can include all of your business and personal debts, such as:
- Unpaid vendor bills
- Business credit lines
- Commercial leases
- Other business expenses
- Personal leases and utilities
- Consumer credit cards
- Personal loans
- Medical bills
A Chapter 7 case can liquidate your remaining business assets and inventory and put the proceeds toward your debts. Depending on your situation, you also might need to give up certain non-exempt personal property. Then, as a sole proprietor, you can have all of your business and personal debts discharged.
Discuss Your Options with a Chapter 7 Bankruptcy Lawyer in Illinois
If the struggles of 2020 have led you to close your sole proprietorship, discuss how to address remaining debts with Illinois Chapter 7 bankruptcy attorney Charles Newland. We seek out debt-relief solutions for our clients, so please call 847.797.9300 or contact us online today.