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  • Difference between Business and Personal Bankruptcy

    In Colorado there are different types of bankruptcies that aim to provide help to consumer and business. While there are two chapters that are completely dedicated to consumer bankruptcy like Chapter 7, Chapter 13, the rest of the other chapters are distributed for dealing or addressing with other areas of bankruptcy. Chapter 9 deals with municipal bankruptcy used by cities, towns, school districts. Chapter 11 deals with business re-organization bankruptcy, Chapter 12 is used by family farms and fisheries and Chapter 15 is used for international bankruptcy to solve the cases involving entities outside United States of America. Thus, no doubt bankruptcy is a complex legal process and for a successful filing seeking the help of an experienced Denver bankruptcy law firm is must.

    When it comes to law for different kinds of bankruptcies the border line between small businesses and sole proprietorships becomes blurred. The unfortunate economic downturn has paved the path of failure for many businesses that has prompted many business owners to seek bankruptcy protection. Chapter 7, Chapter 11 and Chapter 13 are dedicated to business bankruptcy in Colorado.

    Chapter 11 bankruptcy is only applicable for corporations, S-Corporations as well as Limited Liability Corporations. On the other hand Chapter 7 personal bankruptcy is best for many sole proprietors who have designation of “doing business as”. People seeking bankruptcy under this chapter are permitted to personal exemptions including home equity and exemptions for tools and equipment utilized in the course of their employment. After a business owner’s debt is cleared the small business finds itself on a better financial position.

    Chapter 13 bankruptcy is only available for individuals, though it can be a fantastic tool when a business owner has several debts related to business and the business has substantial assets that are worth protecting.

    Chapter 11 bankruptcy treats small business owners bit differently. In a larger scenario a business’s seven largest creditors are asked to form a creditor’s committee. It is difficult to find creditors who will serve as a part of the small business bankruptcy. The court considers a small business debtor to be a business with complete non-contingent liquidated secured and unsecured debts of $2.19 million or less.

    The case must be one where a trustee has not appointed a committee or the one where the court has determined a debtor’s committee is insufficient for providing oversight.

    Using bankruptcy law to protect corporation, partnership or family business is a complex process and seeking help of Denver business bankruptcy lawyer is recommended.

  • ANDREW McKENNA’s CREDENTIALS

    20 Years of Experience
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    Only represents consumers
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    North Metro Denver Office – 11154 Huron
    St. Northglenn, CO 80234

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    E. Florida, Suite 400, Denver, CO 80222

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