{"id":7216,"date":"2023-01-31T09:26:14","date_gmt":"2023-01-31T14:26:14","guid":{"rendered":"https:\/\/pierreroy.com\/?p=7216"},"modified":"2023-01-31T10:49:01","modified_gmt":"2023-01-31T15:49:01","slug":"everything-you-need-to-know-before-filing-for-commercial-bankruptcy","status":"publish","type":"post","link":"https:\/\/pierreroy.com\/en\/2023\/01\/everything-you-need-to-know-before-filing-for-commercial-bankruptcy\/","title":{"rendered":"Everything You Need to Know Before Filing for Commercial Bankruptcy"},"content":{"rendered":"

Filing for commercial bankruptcy is a difficult decision to make and one that should not be taken lightly. It can have long-term effects on your business, finances, and credit score, so it’s important to understand the process before making a decision.<\/p>\n

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Types of Bankruptcies for Businesses<\/h2>\n

Different types of businesses require different types of bankruptcies. The rules are as follows:<\/p>\n

Sole Proprietorship<\/h3>\n

If your company is a sole proprietorship, then you would have to file for personal bankruptcy. A sole proprietorship is an unincorporated business owned by a single individual. The company is run under the owner\u2019s name and the business risks and liabilities fall under the owner\u2019s responsibility \u2014 meaning that the owner\u2019s own assets and property would be included in a bankruptcy. If the company is a sole proprietorship, a personal bankruptcy must be filed.<\/p>\n

Personal bankruptcy<\/span><\/a> protects you from your creditors and is a last resort that enables you to stop your financial position from growing worse, reclaim control of your life, and start over after all other possibilities have been exhausted.<\/p>\n

All of your debts, including credit card debt, mortgage debt, vehicle loan, tax debt, and more, will be discharged after your bankruptcy is over. Some debts, such as court penalties and citations, alimony, fraudulent debts, and school loans (if bankruptcy is within 7 years after the date of graduation), are not dischargeable.<\/p>\n

Registered Company<\/h3>\n

A registered company is considered a sole proprietorship. If the owner of the business wishes to operate under a different name than his own, then the company must be \u201cregistered\u201d and pay annual fees. As a sole proprietor and registered company, the owner assumes all of the risks and liabilities of the business, including any debts.<\/p>\n

Commercial Bankruptcy<\/h3>\n

A commercial bankruptcy<\/span><\/a> involves liquidating the company\u2019s assets in order to discharge the company of debts. It ends all legal actions taken against the company, prevents further filing of proceedings, and can prevent seizures. It should only be considered a last resort. Though a company could be eligible to file for commercial bankruptcy even if they only have more than $1000 of debts, it should seek other options first.<\/p>\n

Eligibility Requirements<\/h2>\n

Before filing for bankruptcy, you must meet certain eligibility requirements<\/span><\/a>. This will ensure that you are able to receive the benefits of the bankruptcy and not risk losing your assets. In Canada, there are a few commercial bankruptcy requirements that you must meet before filing. They are as follows:<\/p>\n