Small business owners and other self-employed people have different reasons for filing bankruptcy. Personal or business debts might be to blame for a lack of financial security. However, most small business owners don’t want to risk losing their business as a result of bankruptcy. They attempt to keep certain assets private. 

If you’re a self-employed individual who is considering filing for bankruptcy, you need to understand how to categorize and report your assets accordingly to avoid issues.

Business Assets Must Be Disclosed In Bankruptcy

No matter what type of business you own or how your business is categorized (incorporated or sole-proprietorship) it is considered an asset. When you file for bankruptcy all assets must be disclosed to the bankruptcy court. Common examples of business assets include:

  • Cash
  • Investments
  • Accounts receivable
  • Inventory
  • Equipment
  • Furniture
  • Vehicles

Business owners must disclose all of their assets, whether those assets are in their personal name or a business name because they have access to them. If you fail to disclose assets during bankruptcy you can face criminal charges including up to $250,000 in fines and up to 20 years in prison.

Are There Bankruptcy Exemptions in Louisiana?

When you file for bankruptcy in Louisiana, you’re allowed some exemptions. For example, many business owners have a skill, trade, or talent that benefits their business. The state of Louisiana assigns no value to such things. One of the most common exemptions taken by business owners is the tools of trade exemption. The tools of trade exemption allows individuals to keep non-luxury tools, vehicles, and books that they need to run their business.

Depending on the specific case, there might be other exemptions available for business owners. To best understand what exemptions you’re eligible for, the best course of action is talking to a trusted attorney. One of the other common questions business owners raise when filing bankruptcy is whether they should file for Chapter 7 or Chapter 13 bankruptcy.

Chapter 13 vs. Chapter 7 Bankruptcy for Business Owners

Most business owners file for Chapter 7 bankruptcy. However, there are situations when Chapter 13 bankruptcy is appropriate. When you file for Chapter 13 bankruptcy as a business owner, your personal assets are not at risk (although you must disclose them). Instead, you create a payment plan with your creditors to repay your debts. 

If you speak with an attorney and learn that you qualify for Chapter 13 bankruptcy, it’s important to understand that all of your assets are safe. 

Trust the Experienced Attorneys at E. Orum Young Law

The bankruptcy experts at E. Orum Young Law are experienced in both Chapter 7 and Chapter 13 bankruptcy cases. With more than 35 years of experience, the E. Orum Young team is knowledgeable regarding bankruptcy laws and will be able to educate you on your options. They have filed more bankruptcy cases than any other law firm in Northeast Louisiana and are proud of it. To schedule a free case review call 318-450-3192 or contact us online today.