Recently, I’ve had a few clients who are being sued by their creditors on breach of contract matters for money owed. Invariably, they want to know what their best option is. Is it defending the suit? Perhaps letting them get a judgment? Or Is bankruptcy for business owners a viable solution?
The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act modified some of the eligibility requirements for a filing of bankruptcy. The most significant change in that statute was the inclusion of the “Presumption of Abuse” criterion. Before 2005, any individual could file for bankruptcy, regardless of income. However, if one’s income is above the median income of their state, there additional obstacles to filing. These are not always easily navigated.
However, debtors whose debts are primarily “business expenses,” do not have to overcome the “Presumption of Abuse”. Business owners who make more than the median income for North Carolina but who still have liabilities that exceed assets and expenses that exceed income will have a much easier time gaining eligibility for bankruptcy protection.
We can help.
If you are a business owner facing litigation from your creditors, there are options available to you. Our attorneys can handle the creditor litigation, but can also counsel you on bankruptcy options. Bankruptcy for business owners may discharge any debt owed to those creditors who have filed suit. It maybe that defending the suit is your best course of action, but it may not be worth it. We can also counsel you on any potential claims against creditors for violations of various debtor protection statutes. It is important for business owners to be aware of all of their options and to discuss with their lawyer which strategy is best for moving forward.
If you are a business owner facing potential liability from your creditors, contact Maginnis Law, PLLC to schedule a free consultation to discuss your options. Maginnis Law is a litigation and bankruptcy law firm based in Raleigh with clients all over the Triangle, including Cary, Wake Forest, Rolesville, Leesville and Apex. Contact the firm at (919) 526-0450 or through our contact page.