Bankruptcy for Business: Will I Lose My Incorporated Business?
If you are considering filing for bankruptcy, but you own an incorporated business, you’re probably wondering if your personal bankruptcy will mean small business bankruptcy as well. Especially if the business is a viable revenue source, you want it to keep operating after your bankruptcy discharge.
The common belief is that personal bankruptcy won’t affect an incorporated entity. After all, you incorporated your business to separate your personal liability from your business risks, right? If incorporation protects you from corporate liability, shouldn’t it also protect the business from your personal liability?
Unfortunately, the business is not protected if you file for bankruptcy protection. Although you do not technically own the corporation’s assets, you do own the stock. Since stock is just ownership rights to the business, your stock (and the ownership of the corporation) will transfer to the estate after you file for bankruptcy protection.
