Small Business Bankruptcy Lawyers in Texas

Small businesses fuel a significant portion of our economy and contribute to the growth and vitality of communities throughout the United States. But no matter how vital, beloved and well-run it is, any business can encounter financial issues that lead it to unmanageable debt.

Texas Small Business Bankruptcy Lawyers

• Types of Business Bankruptcy
• Our Business Bankruptcy Lawyers Can Help You Avoid Litigation
• What Happens to Litigation or Judgments Against You When You File Bankruptcy?
• Are You Personally Liable for Business Debt?
• Can a Creditor Still Collect a Debt or Judgment If You File Bankruptcy?
• How Do You Avoid the Means Test in a Business Bankruptcy?
• Why Choose Our Business Bankruptcy Lawyers?
• Contact Our Business Bankruptcy Attorneys for a Free Consultation

For more than 15 years, our business bankruptcy attorneys at Leinart Law Firm have helped small businesses in financial distress find options to get rid of debt, avoid litigation and keep their businesses solvent.

Types of Business Bankruptcy

Federal laws allow businesses to file for Chapter 7, Chapter 11 or Chapter 13 bankruptcy. Typically, businesses opt to file Chapter 7 or Chapter 11 bankruptcy. Depending on the structure of a small business or sole proprietorship, they may be able to file Chapter 13 bankruptcy. The type of bankruptcy that ultimately provides the most benefits depends on a number of factors specific to the business.

If you’re a small business owner, it’s important to consider your future plans when deciding which type of bankruptcy to file. For example, if you want to discharge your debt without a repayment plan and get a fresh start, Chapter 7 bankruptcy may be the best option for you. However, if you plan on continuing to do business, you may want to file Chapter 13 bankruptcy so you can maintain relationships with your vendors and suppliers.

Depending on the type of business and how it’s set up, you may be able to discharge your business debt in a consumer bankruptcy. Our Dallas business bankruptcy lawyers take a comprehensive look at both your personal and business finances and determine which options will best suit your specific needs. We can help you understand the benefits and limitations of your bankruptcy options so you can make an informed decision about how to proceed.

Our Business Bankruptcy Lawyers Can Help You Avoid Litigation

Fighting a lawsuit makes it difficult for a business to operate. There are myriad reasons why someone may take legal action against a business, including:

• Collection actions by a supplier for unpaid bills
• Contractual disputes
• Enforcement action by a governmental agency for a regulatory violations
• Patent infringement or other battles over intellectual property
• Internal conflict involving the other owners or investors in the business

If your business is already in a precarious financial position, a lawsuit can push it over the edge. Litigation can be costly, and if someone wins a major judgment against your business, it can lead to closing your doors for good.

Business Bankruptcy FAQs

What Happens to Litigation or Judgments Against You When You File Bankruptcy?

When you file bankruptcy, an automatic stay is put on your debts. This means creditors must stop collection actions, including pending lawsuits or existing judgments against you. If you run your business as a sole proprietorship, your debts and claims against you can be discharged in Chapter 7 bankruptcy. If your business is structured as a corporation, an LLC or another type of entity, there are certain factors that can affect whether a judgment can be discharged. We understand that each case is unique. Our business bankruptcy attorneys in Dallas have helped thousands of clients throughout north Texas find the debt relief solutions that are right for them.

Are You Personally Liable for Business Debt?

Your personal liability for business debt depends on the structure of your business. Here’s how:

• Sole Proprietorship – A sole proprietor is not a separate legal entity. This means you and your business are equally liable for personal and business debts.
• General Partnership – In a general partnership, each partner is considered a general partner and is personally liable for business debt.
• Limited Partnership – In a limited partnership, there is at least one general partner and at least one limited partner. The general partner holds personal liability for business debt. The limited partner does not.
• Limited Liability Partnership (LLP) – An LLP is designed to protect all partners from personal liability for business debts. However, in some states, liability protections apply only to negligence claims. All partners may still be personally liable for business debt.
• Corporation – Shareholders of a corporation typically have no personal liability for business debts. However, shareholders may be held liable if a creditor can prove that required corporate formalities were not followed.
• Limited Liability Company (LLC) – Owners of an LLC are not liable for business debt unless they have personally guaranteed the debt.

Our business bankruptcy lawyers consider the structure of your business and other factors when determining whether you’re personally liable for business debt.

Can a Creditor Still Collect a Debt or Judgment If You File Bankruptcy?

There are a few ways a creditor or plaintiff may attempt to proceed with a lawsuit or collect a judgment after you file bankruptcy. They can request “relief from the automatic stay” to get the bankruptcy judge’s permission to continue the lawsuit or to collect on a judgment. However, if the claim or debt is dischargeable, their request will most likely be denied.

They could also file an “adversary proceeding” in bankruptcy court to object to the discharge of the debt or claim. However, these objections present significant legal and practical challenges. Grounds for non-dischargeability are very narrow and tough to meet. In addition, your adversary may have to prove that you engaged in fraud, material misrepresentation or other nefarious conduct that makes a valid debt or claim non-dischargeable in bankruptcy.

Common Reasons For Bankruptcy And How To Safeguard Your Business

At Leinart Law Firm, our Small Business Bankruptcy Lawyers in Texas recognize that small businesses face unique financial challenges. Understanding common reasons for small business bankruptcy is the first step toward proactive financial management. Let’s explore these reasons and practical strategies to prevent them:

1. Insufficient Cash Flow:

Insufficient cash flow is a prevalent reason small businesses face financial turmoil. To prevent this, establish robust cash flow management systems, negotiate favorable payment terms with suppliers, and implement efficient invoicing processes.

2. High Fixed Costs:

Excessive fixed costs can cripple a small business. Regularly review and renegotiate contracts, explore cost-sharing arrangements, and consider flexible work arrangements to optimize resources. Cutting down on high costs can help the company to stay afloat during difficult times.

3. Poor Financial Planning:

Inadequate financial planning can lead to unforeseen challenges. Engage in proactive financial forecasting, create realistic budgets, and regularly review financial statements to identify potential issues early.

4. Ineffective Marketing Strategies:

A lack of effective marketing can impact revenue streams. Invest in strategic marketing initiatives, leverage digital platforms, and monitor marketing ROI to ensure your business remains visible and competitive.

5. Economic Downturns:

Economic downturns can hit small businesses hard. Diversify revenue streams, maintain an emergency fund, and explore government assistance programs to weather economic uncertainties.

6. Over Reliance on Personal Finances:

Blurring the lines between personal and business finances is risky. Establish clear financial boundaries, maintain separate accounts, and avoid overreliance on personal assets to sustain the business.

7. Failure to Adapt to Market Changes:

Businesses that fail to adapt to market changes risk becoming obsolete. Stay abreast of industry trends, gather customer feedback, and be agile in adjusting products or services to meet evolving market demands.

8. Inadequate Legal Protections:

Lack of legal protections can expose a business to significant risks. Consult with legal professionals to ensure proper business structure, contracts, and compliance with regulations, safeguarding your business against potential legal challenges.

9. Uncontrolled Debt Accumulation:

Accumulating unmanageable debt can lead to financial distress. Monitor debt levels, explore debt restructuring options, and consult with financial advisors to maintain a healthy debt-to-equity ratio. Uncontrolled debt accumulation is one of the leading causes of businesses entering into bankruptcy so always be on the lookout for rising debt levels in your company.

10. Lack of Emergency Preparedness:

Businesses without contingency plans may struggle when unexpected events occur. Develop a comprehensive emergency preparedness plan, including risk assessments and mitigation strategies.

By addressing these common pitfalls, small businesses can fortify their financial foundations. Leinart Law Firm, your trusted Texas Small Business Bankruptcy Lawyers, is here to provide legal guidance and support tailored to your business needs.

Contact Us Today

Contact Leinart Law Firm for a personalized consultation with our experienced Texas Small Business Bankruptcy Lawyers. Let us help you navigate the complexities of business finance, providing strategic solutions to safeguard your business from financial challenges. We are ready to help you get your finances back on track.

How Do You Avoid the Means Test in a Business Bankruptcy?

The means test applies to individuals whose debts are primarily consumer debts, not business debts. It requires those who have the resources to pay back all or a portion of their debts to do so. Typically, the means test is based on income. If your income is too high, you will not be eligible to have all your debts discharged in Chapter 7 bankruptcy.

However, If more than 50% of your debt is business debt, you may be eligible to file for Chapter 7 bankruptcy without doing the means test. For example, if you have a debt from a commercial lease that was broken, the unpaid lease payments for the projected term of the lease could significantly add to the amount of business debt you’re carrying. If you have more business debt than consumer debt, you may be able to skip the means test and discharge all your debts through Chapter 7 bankruptcy.

Why Choose Our Business Bankruptcy Lawyers?

Bankruptcy law is complex. If you are considering consumer or business bankruptcy, our attorneys can evaluate your specific circumstances and help you understand the options that may be available to you. Our team at Leinart Law is committed to providing quality legal advice and developing an action plan to protect your business, whether that means liquidating assets to pay back creditors or implementing a reorganization plan to make your company profitable.

Contact Our Business Bankruptcy Attorneys for a Free Consultation

Whether you want to strengthen the financial stability of your business or you’re ready to move on to something new, our business bankruptcy lawyers at Leinart Law Firm can help you meet your goals. Call our Dallas office at 469-232-3328 or our office in Fort Worth at 817-426-3328. You can also complete the contact form on our website, use our convenient chat feature or email us to schedule a free consultation. We proudly serve clients throughout north Texas.