Business Bankruptcy Attorney in Indiana
Most people who call us about business bankruptcy don’t actually have a business bankruptcy problem. They have a personal one, and they don’t know it yet.
Here’s why. You started the company, and to get it off the ground you signed a personal guarantee on the lease. Then the equipment loan. Then, when things got tight, you started floating payroll on your own credit cards, and you took a personal loan because the business couldn’t qualify for one. None of that was reckless. It’s how almost every small business in this country gets funded. But it means that by the time you’re behind on everything, the debt isn’t really the company’s anymore. It’s yours.
So the first question we ask isn’t which chapter you should file. It’s how the company was set up, what you personally signed, and what’s actually left in the business worth protecting.
What most callers are really asking
After a year or two of falling behind, people generally arrive with three questions. Can I shut this down. Do I file for the business or for myself. And if I don’t want to shut it down, is there any way to keep going.
The answer to the last one depends almost entirely on your structure and your debt load. If the entity was set up correctly and the numbers aren’t hopeless, there is often a path where you wind down the old company, liquidate whatever assets or inventory exist, and reopen under a new name with new accounts. For most of our clients that’s a short conversation, because a small operation usually doesn’t have much in the way of hard assets. There’s no warehouse to fight over. It’s mostly bad debt.
Chapter 11 and Subchapter V
Chapter 11 gets talked about a lot, and the version most people picture — the big corporate reorganization that runs for years and costs a fortune — genuinely is the wrong fit for a small operation. But there’s a smaller door. Subchapter V was created specifically for small business debtors. It’s faster, it’s meaningfully cheaper, there’s no creditors’ committee, and you don’t need creditor approval to confirm your plan the way you would in a standard case. If your business is fundamentally sound and just crushed by a bad stretch, it’s worth asking about. If it isn’t sound, no chapter of the code fixes that, and we’ll tell you so.
Chapter 7 and the discharge wrinkle
Chapter 7 is the more common path, and there’s an important wrinkle people don’t expect. A corporation or LLC doesn’t receive a discharge in Chapter 7. The trustee liquidates the assets, pays creditors as far as the money goes, and the entity simply stops — but the company’s debts aren’t wiped clean, because there’s no longer anyone there to collect from. That’s why the personal side matters so much. The guarantees you signed don’t disappear with the business. Clearing those is what a personal Chapter 7 does, and for most of our clients that’s the filing that actually solves the problem.
Can’t I just close the doors and walk away?
You can. We don’t recommend it, and here’s the honest reason. The debt doesn’t evaporate because the business stopped operating. The back taxes are still there. The guaranteed accounts are still there. What happens is that the collection activity goes quiet for a while, and then it turns personal — judgments, garnishment, liens. People who try this usually end up back in our office a year or two later, with fewer options and less money to work with than they had the first time.
Closing the business is an event. Resolving the debt is a separate decision, and it doesn’t make itself.
Talk to us first
If your business is failing, the worst version of this is the one where you wait until a creditor forces the timing. Call our office for a free consultation. We’ll look at how the company is structured, what you’re personally on the hook for, and tell you plainly whether there’s something here worth saving.
