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Sole Propriter Bankruptcy CH 7 Question?

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    Sole Propriter Bankruptcy CH 7 Question?

    I run a small business and I am filing CH 7 soon, my debts all all unsecured and a combination of business debt, consumer debt and medical debt (60k). My only income is from my business and I plan on continuing operations. I can cover the tools and materials with exemptions and the small amount of inventory would be covered with exemptions too (I think). I run a small jewelry business and sell my manufactured items directly to retail customers. Other than my business I have no other valuable assets, I do not own a house and I drive an old beater car.

    So my question is will I be able to continue as usual after I file or will the trustee make me halt operations during the bankruptcy process?
    Last edited by rainypass; 10-17-2013, 07:45 AM.

    I run a small business here in California. I was in the same shape as you are when I filed CH 7 a couple of years ago. I was afraid of the same thing. I also have a state license and I was worried about that too. It went smoothly. Depending on your state exemptions you should be able to exempt the tools of your trade, and vehicle. In California there is a wildcard exemption which covered a lot of things, don't know about Washington.

    I'm still running the same business and doing fine. It's been tougher without credit, but I think it made me pay more attention to the books. Example, right now I need (want badly) a new computer and smart phone, but I have to save up for it and pay cash. In the past I would have whipped out a credit card. No more.

    Talk to some attorneys and get their option. I don't think you will have any problem. Best of luck.


      Assuming your business doesn't have marketable "goodwill" value, just make sure you can use exemptions to cover tools, materials and inventory. Washington gives you a choice of using either state or federal exemptions.
      LadyInTheRed is in the black!
      Filed Chap 13 April 2010. Discharged May 2015.
      $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!


        You should be able to continue business as usual. However, when it comes to professionals and business owners, you really need to hire an attorney. Too much risk and too many pitfalls. Since you say the business is a sole prop, that means there is no legal distinction between you and the business. The trustee will want to look at the business bank accounts and any possible accounts receivables you have outstanding. Exemptions may not cover everything so you need some attorney guided pre-bankruptcy planning.


          Thank you for the feed back bcss, it is good to here from another entrepreneur who has been able to keep their business during bankruptcy.
          I plan on being upfront about the value of my business assets and it does fit into allowable exemptions so hopefully every thing will go smoothly with my case. I can't help but worry about how the process will go, can the trustee halt my business to determine if the value is what I have claimed?

          Bankruptcy will be a big change in how my business operates financially, right now all my money has been going back to paying my debt and with nothing left to spend I kept using the credit cards to keep going. It will be good to go back to cash and investing directly back into my business.


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