Can I file for Chapter 7 Bankruptcy in New York if I own a business?
The short answer to this question is yes. This really depends, however, on the type of business you have, the size of the business, the strength of the business, etc. What I mean by that is the following: Lets say that you have a side business where you repair computers. There is no physical location for the business. You work from home and you don’t really have any valuable assets or tools to speak of. With this business, after expenses you made approximately $10,000.00 last year. In this type of situation, the concerns for filing for Bankruptcy should be minimal. The Trustee can’t really take an interest in the business unless there are assets to sell. And there are also transaction costs which are involved in selling assets of a business.
So the long and short of it is that a Trustee will likely leave your business alone, and you simply need to account for the income you earned through the business on the Median Income Test. If, however, you run a dry cleaners and have several employees and certain materials and assets that can be sold off (for instance a good lease, expensive equipment, etc.) than the Trustee will likely take an interest in your business and may very well force you to stop operating. He/She may inspect the business and see if there is anything worthwhile to sell.
Remember, business assets have no exemptions in a personal Chapter 7 Bankruptcy. Meaning you can’t protect any money in the business checking account, the way you could if it were your own personal account. If, however, you’re business is bleeding money and you simply want to walk away, you may do that as well. There are many situations which fall in between these two. You DEFINITELY should speak with a bankruptcy attorney before filing the case to make sure you know your rights. And, as an aside, NEVER try and transfer assets of a business, or your name from a business, simply because you want to do a Bankruptcy. Not only is it unethical, but it is also considered fraud. The only way to do this is to be truthful and complete. Again, there are several variables to go into your decision of whether or not to file for a Bankruptcy if you have a business, so make sure to discuss these in detail with your attorney.