Our Debt Relief Attorneys in Denver Will Help You Find a Path to Financial Freedom
Owning a small business today is more challenging than ever. There’s heavy competition, the economy is uncertain, and the day-to-day challenges of keeping everything rolling is unexpectedly more stressful than it seems to people who’ve never run a business.
Many smart business people take out loans with the intent to grow their business and become more profitable. Most businesses simply can’t get started without the helpful capital that loans provide.
However, businesses do sometimes run into trouble, as paying back those loans becomes very challenging when business growth isn’t increasing like expected. When these difficulties start, you might discover that you are personally liable for your debt. Often, business loans are personally guaranteed, so even if you close your business or put it into a small business bankruptcy, you’re still responsible for paying your debt.
This doesn’t mean you should hide from your debt. Instead of finding ways to access more loans to pay off the old ones, better solutions are available, including debt settlement and personal bankruptcy. These strategies protect your financial future and can even help you get your business back on track.
Read on to learn how Wink & Wink, the leading bankruptcy lawyer for small businesses, handles small business debt. It’s our job to ensure you get relief from debt, as well as the stress that comes with it. We champion small businesses in the Denver area, and we want to see you get back on your feet.
Our Denver Debt Relief Attorneys’ Business Loan Solutions
Each of the solutions below are based on your individual circumstances. Every business owner takes on different kinds of debt to give their business a needed boost or to get through tough times. Wink & Wink provides precise, customized legal strategies, including debt settlement, to ensure your business gets debt relief when you can’t pay them back.
Wink & Wink’s small business bankruptcy lawyers provide debt-relief strategies for sole proprietorships or LLCs to help you continue your business or find new opportunities without old debts hanging over your head.
Business Loan Solutions for Sole Proprietorships
If you operate your business as a sole proprietorship, you and your business are one and the same. Your business and personal assets aren’t separated from each other, and your business debt is personal debt. This means that any debt relief solution you seek out is for personal debt relief. In bankruptcy, you must include all your debt, so all of your personal debt as well as your business debt will be included and discharged.
For small business owners who are sole proprietors, your debt relief options are Chapter 7 bankruptcy, Chapter 13 bankruptcy or debt settlement. Whether you prefer to avoid bankruptcy or you view bankruptcy as your option, it is important that you seek out expert advice such as that given by the small business debt relief attorneys at Wink & Wink.
Debt settlement: Wink & Wink can help you settle many types of small business debt for a fraction of what you owe. Secured debt is trickier to settle because the creditor will often seek to repossess collateral before negotiating a settlement of the remaining balance. However, the assets of many small businesses have only nominal value and aren’t worth it for the creditor to repossess.
For these debts and unsecured debt, you can often settle for approximately half of the balance owed. While payment plan settlements are possible, you often need to be able to pay the settlement in a lump sum or within a fairly short period of time (months) to obtain the best settlements. If you’re able to save enough money to settle your debt within two years of default, this debt solution may not be for you. Successful settlement requires paying something to the creditors and, while creditors will often take steep discounts from the balance owed, they tend to want to get paid rather quickly. They will not accept nominal monthly payments and, if you don’t get a settlement in place, will typically sue you personally to collect the debt. Creditors sue you so that they may obtain a judgment, which can be used to garnish wages or funds in the bank as well as to put a lien on your home.
Chapter 7 bankruptcy: If you aren’t able to save enough to successfully settle your debt or otherwise don’t own too much in the way of assets, Chapter 7 bankruptcy may be best for you. For most people, qualifying for Chapter 7 requires that you not make too much income so that you can pass the means test. For example, Colorado residents whose income is under $75,710 for a single person or $98,365 for a two-person household are eligible for Chapter 7 bankruptcy (keep in mind that these income thresholds are current as of October 2023 and are adjusted in November and April of each year).
If you make more than this, bankruptcy law requires you to itemize allowable expenses to determine your disposable income. Typically, you are not eligible for Chapter 7 if you have positive disposable income. However, you can avoid the means test altogether if the majority of your debt is non-consumer debt, which includes business debt and taxes. Since a mortgage is considered consumer debt in this analysis, many homeowners do not qualify as non-consumer debtors because their mortgage plus their other personal debt exceeds the total of their business and tax debt.
In Chapter 7 bankruptcy, you will typically get a discharge of your business and personal debt. This debt includes credit card debt, as well as personal liability for business loans and even broken business leases. Additionally, you can often get this discharged while keeping all of your assets. In Colorado, you can also keep up to $60,000 worth of business assets if they are used for your primary source of income ($20,000 if for a secondary source of income). After filing for small business bankruptcy with the support of Wink & Wink’s Denver debt relief attorneys, many business owners improve their credit and become eligible for a mortgage within two years of filing.
Chapter 13 bankruptcy is also available for small business owners who are not eligible for Chapter 7 because their income exceeds Colorado’s income threshold for Chapter 7 bankruptcy or who otherwise want to take advantage of the more favorable aspects of Chapter 13 bankruptcy. For example, while unprotected property can be taken from you in Chapter 7 by the bankruptcy trustee, the Chapter 13 bankruptcy trustee will never take your property. Additionally, you may be able to reduce the amount you owe for a secured debt on a business asset to what it is worth rather than what you owe. For example, if you overpaid for your truck and trailer and owe a lot more on these assets than they are worth today, you can restructure the amount owed on the loan to the value of these assets and pay this restructured amount through a three-to-five-year Chapter 13 bankruptcy plan.
Business Loan Debt Relief Solutions for Business Entities
If your business is structured as an LLC or corporation, it is technically a separate legal entity from you. In this case, your business debt and business assets are separate from your personal debt and personal assets. However, many business loan creditors will require that the owner of the LLC or corporation personally guarantee the debt as a condition of giving the loan. In this case, the business owner is personally responsible for the guaranteed business debts. Most business leases, credit cards, lines of credit, SBA loans, and merchant cash advances are personally guaranteed. For business owners with guaranteed business debt, business debt relief is personal debt relief, and there are several ways to achieve this.
Debt Settlement: It is possible to settle both your personal and your business’ liability for certain types of debt. While settlement tends to be more cost-effective when the LLC or corporation is dissolved, it is possible to settle business debts while continuing to operate your LLC or corporation. Wink & Wink has enabled many small businesses to settle significant, crippling debt so that both the LLC or corporation, as well as its owner, can move on for a profitable future.
Business restructure: If settlement is not possible and bankruptcy is required to resolve guaranteed business debt, the challenge is that both the LLC or corporation, as well as the small business owner, require bankruptcy. If the business files bankruptcy, the owner remains liable for the debt. If the owner gets out of that debt in personal bankruptcy, the LLC or corporation still owes the debt. While the business and its owner both filing bankruptcy is possible, it is often much more cost effective for the small business to restructure their business as a sole proprietorship prior to filing personal bankruptcy.
This strategy often minimizes the fees associated with the bankruptcy because the legal fees of filing one bankruptcy is cheaper than filing two, and business bankruptcy is often much more expensive than personal bankruptcy, especially in Chapter 11 or subchapter 5. It also can enable the business owner to protect business assets as tools of the trade, which is available to sole proprietors, but not owners of corporations or LLCs. When done properly, this strategy of dissolving your LLC or corporation, while continuing to operate the business as a sole proprietor and filing personal bankruptcy, can provide significant debt relief at minimal cost. It can enable you to continue operating your business while leaving the business debt behind, and without your customers or employees even knowing. Wink & Wink’s small business bankruptcy lawyers have extensive experience with this strategy, as well as other business loan solutions.
Work with Wink & Wink for Relief from Your Business Loan Debt
Whether you decide to continue your business after small business bankruptcy or debt settlement, or you’re considering a fresh start, Wink & Wink’s solutions place you in an optimal position to move forward.
Our Denver debt relief attorneys champion small-business owners. We ensure that you feel understood and that our legal strategies are in your best interest. Beginning with our free consultation, we ensure you receive a customized legal strategy that will help you recognize new possibilities for the future, instead of continuing to enlarge your debt.
Schedule a consultation with Wink & Wink, the leading bankruptcy lawyers for small businesses. During our call, we want to hear your business’s story and help you access our debt relief solutions.