Many small businesses are run and operated by the business owner/sole proprietor. This is common for service oriented businesses like carpet cleaners, yoga instructors, handymen, etc.
This type of small business usually doesn’t have a lot of valuable assets that can be possessed by the bankruptcy official to pay your creditors. In this situation you can still keep your business and continue operating it after you file for a Chapter 7 Bankruptcy.
If you operate your business as a Corporation or a Limited Liability Company, the bankruptcy trustee will be able to liquidate your business, sell the actions, or sell the ownership of the business.
You may be able to buy the business back, but if you need to borrow money from your friends or family this may get you into even more financial problems than you already have.
Many small business owners have asked me if they can still own and operate their business if they file for a Bankruptcy Chapter 7.
This depends on if your business has assets. If there are assets a bankruptcy trustee will be assigned to inventory and sell to action all of your non-exempt business assets. The fruit of the sales will be used towards paying your creditors.
There are a few exemptions for business assets that you won’t need to sell. You can ask an attorney about which ones are the exemptions and if they apply to your case.