Typically, everyone that files a personal, individual, bankruptcy in New Jersey, who owns a small business, may keep their business. The bankruptcy laws analyze a business as an asset of the debtor. The debtor can keep any asset in a chapter 7 that does not have a substantial value. If the business is a corporation or limited liability company, the debtor’s interest in the asset (business) is based on his percentage of ownership in the company. Therefore, if the debtor owes 50% of the company and the company has a value of $5,000.00, than the debtor’s interest is $2,500.00.
Most small businesses do not have a substantial sale’s value, as the value is based on the reputation of the owner, who will likely not continue his association with the business after the sale. Larger businesses may require a forensic accountant to determine the sales’ value. The value of a business includes a number of factors, such as the value of the business’ assets, income, expenses, and debt. A corporation that owns a valuable property, with no mortgage may have a substantial value.
Although extremely unusual, a New Jersey bankruptcy trustee has the power to operate a business for a certain period, if the operation will benefit the bankruptcy estate and creditors. In general, a person filing a chapter 7 does not own a thriving and valuable business.
A chapter 13 bankruptcy trustee will never sell a personal, individual, debtor’s business. However, if a business has a substantial value, the debtor may be required to pay more money to the creditors in a chapter 13.
Robert Manchel, is a bankruptcy lawyer in New Jersey, who may be contacted at 866 535 5655.