Filing for bankruptcy when you own a business is certainly not an easy prospect. No one ever goes into business expecting to fail. Given uncertain economic times and matters beyond your own control; however, you may find that there are few options left available to you other than filing for bankruptcy. When you recognize that you need to file for bankruptcy, it is important to also make sure that you understand business bankruptcy law. In the last few years there have been changes made to business bankruptcy law that could affect you in your current situation.

The best way to ensure that you understand business bankruptcy law and how it applies to your current situation is to hire an experienced bankruptcy attorney who can walk you step by step through the process.

One of the primary changes that have been made in business bankruptcy law relates to who can file for certain types of business bankruptcy. Prior to these changes in business bankruptcy law, it was much easier to file for Chapter 7. As a result of these changes, you must now meet certain requirements in order to be allowed to file for Chapter 7. Additionally, regardless of whether you are filing for Chapter 7, Chapter 11 or Chapter 13, you will now be required to receive credit counseling before you can file any type of business bankruptcy.

As a result of the changes in business bankruptcy law, you must now meet income measurement tests before you will be allowed to file for Chapter 7. This means that your current income must be measured against the median income in your state. If your income is higher than that amount, then you must pass the means test in order to file for Chapter 7. The means test involves determining the amount of disposable income that you have after allowable expenses and required debt payments have been subtracted. You must have less than a specific amount of money left over each month in order to be allowed to file for Chapter 7. If you fail both the income and the means tests, then you will not be allowed to file for Chapter 7 and you will need to consider either Chapter 11 or Chapter 13.

Before you can file for any of those types of bankruptcy, you will have to demonstrate that you have completed credit counseling. The counseling must be completed by an agency that has been approved through the United States Trustee. The goal of such training is to provide you with information that will help you to determine whether filing for bankruptcy is really necessary in your situation. It was hoped by passing this business bankruptcy law that many people will find that a repayment plan will help them to meet their financial obligations. Keep in mind; however, that even if you feel that a repayment plan will not solve your current problems, that you will still be required to participate in counseling. Along with this initial counseling, you will also have to participate in a separate counseling session that will take place toward the conclusion of your bankruptcy case. The purpose of this counseling is to provide you with financial management training.

While these business bankruptcy law requirements can seem stringent to many, it is best to make sure you are informed and prepared before you make preparations to file.

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