Legal Corner


-List Your Site Here! -- Targeted Advertising For Just Pennies A Day! -Tell A Friend - Bookmark This Page

LegalCornerTM - Business Bankruptcy - Chapter 7 or 11 F.A.Q.'s

Find A Lawyer
Law Area:
 

State:
 

 
Search

Search:

Search By:

--Back

Q.Will incorporating my business help if I plan to file bankruptcy?

A.Incorporating a sole proprietorship creates a legal entity separate from the business owner. Most trustees will not interfere in the business operations of a corporation owned by a bankruptcy debtor. However, if the corporation has a greater value than any exemption claimed in the stock, the trustee may insist that the debtor either: (a) buy the stock back from the bankruptcy estate or (b) dissolve the corporation so its value can be distributed to the bankruptcy estate. Arguably, incorporating a sole proprietorship does not constitute a fraudulent transfer but merely a change in form of the asset held by the debtor. Before incorporating, you would be wise to consult an attorney who can advise on the judicial attitudes in your locality.




Copyright 1999-2018 Melissa C. Marsh. All Rights Reserved. All Information on this website is subject to a Disclaimer and Use Agreement. This information is provided as general information only and should not be construed as legal advice. We advise you to seek the advice of competent legal counsel to address your own specific questions, facts and circumstances.