If you find your business facing bankruptcy, you may be scrambling for ideas on how to protect your assets from a trustee’s claim. Unfortunately, if you’re already in bankruptcy proceedings, you’re far too late to do anything that will effectively protect your assets during bankruptcy in Chicago. The good news, though, is that if you plan ahead and set up your business the right way, you can protect your assets in the event of bankruptcy.
However, to do so effectively, you’ll need to plan at least a couple years in advance. For those of you who ascribe to the saying “hope for the best, prepare for the worst,” here’s some more information on why right now is the best time to start thinking about asset protection in the event of bankruptcy.
Limiting Personal Liability
One of the easiest things you can do is to set up your business so that, if anything does happen, creditors will have limited recourse by which to pursue your personal assets. If you do this right—in most cases—you can limit your losses to only the assets that are owned by your business. A skilled lawyer can help you set up your business with an ownership structure that protects your personal assets like your home, cars, and personal bank accounts.
However, even with the correct business structure, you’ll have to keep your business finances and personal finances separate. Otherwise, you open yourself up to personal liability. Also, if you provide a personal guaranty on any of your business loans, your lender will be allowed to go after your personal assets.
Avoiding Bankruptcy Fraud
If you’ve filed for bankruptcy, any large transactions that you’ve completed over the past several years will be closely scrutinized. This is because the court wants to ensure that you’re not simply getting rid of assets in order to shelter them from bankruptcy proceedings. If the court finds that you are doing this, you’ll be guilty of bankruptcy fraud. This is a very serious offense and if you do it, you won’t be able to discharge your bankruptcy.
The Law Office of Thomas W. Drexler
Bankruptcy in Chicago, or anywhere else in the country is a complicated and emotional process for any business owner. Make sure you sit down with a bankruptcy attorney to review the large transactions you’ve made in the past several years. If you need help now, give us a call at 1-312-726-7335.