There are specific sections of the bankruptcy code that are designed to help consumers and specific sections designed to help businesses. However, that line often blurs when it comes to small businesses and sole proprietorships – which have long been the backbone of the American economy.
The Denver bankruptcy attorneys at George T. Carlson & Associates are dedicated to assisting consumers, business owners and companies deal with financial issues. Each case is unique; that’s why we offer a free and confidential consultation to discuss your rights and determine the best course of action for your personal financial situation.
The Great Recession devastated far too many Colorado businesses. Chapter 11, which permits business reorganization, has seen a substantial increase in activity. In 2004, before the downturn, 100 Chapter 11 bankruptcy cases were filed in Colorado, according to the U.S. Bankruptcy Court for the District of Colorado. By 2010, that number had nearly doubled to 182.
And many businesses will be paying the price for the economic downturn for years to come; reduced access to credit and high credit card debt is expected to contribute to business failures through the remainder of the decade.
Chapter 7 and Chapter 13 Business Bankruptcy in Colorado
Of course many more businesses failed. And many more business owners sought bankruptcy protection. Chapter 11 bankruptcy is only available for corporations, including S-Corporations and Limited Liability Corporations.
- Many sole proprietors are best served by filing for Chapter 7 personal bankruptcy with a “doing business as” designation. You will still be permitted personal exemptions – including home equity and exemptions for tools and equipment used during the course of your employment – and there is no means test. With a business owner’s debts cleared away, a small business is typically on much better financial ground.
- Chapter 13 bankruptcy: Is only available to individuals. However, this can be a great tool when a business owner has many business- related debts and the business has substantial assets worth protecting.
Small Business Bankruptcy in Colorado
Chapter 11 of the U.S. bankruptcy code treats small business owners slightly differently. In larger cases, a company’s seven largest creditors are asked to form a creditor’s committee. Finding creditors who will serve as part of a small business bankruptcy can be more difficult.
- The court considers a small business debtor to be a business with total non-contingent liquidated secured and unsecured debts of $2.19 million or less.
- The case must be one in which a trustee has not appointed a committee or one in which the court has determined a debtor’s committee is insufficiently active to provide oversight.
Such cases can generally proceed through the bankruptcy process at a faster pace. In such cases, only the debtor may file a reorganization plan during the exclusivity period of the first 180 days. That period may be extended to 300 days but in larger cases it can last up to 18 months.
Whether a corporation, partnership or family business operated as a sole proprietorship, using the bankruptcy laws to protect a business and its owners is a complex process and always requires a business bankruptcy lawyer in Denver with the knowledge, resources and experience to protect the future of a business and its owners.
Contact a Colorado Bankruptcy Attorney Today
If you need bankruptcy assistance in Denver or would like more information, call George T. Carlson & Associates today at 303-789-1313 for a free consultation or contact us online. We are a debt relief agency. We help people file for bankruptcy under the Bankruptcy Code. Serving clients in Denver and throughout Colorado, including Aurora, Englewood, Lakewood and Boulder.
Denver Bankruptcy Help – 303-789-1313 – Free Consultation
