Here are the factors for determining whether a business lease is treated as a true lease in bankruptcy or rather as a secured purchase.
A business leases may not be a true lease but rather recharacterized as a secured purchase, giving you significant power over the creditor.
With business leases you have the same options in bankruptcy as with consumer leases: to “assume” or “reject” the lease.
Beyond considering whether your assets have net value on the date of filing, do they generate rents, profits, or proceeds afterwards?
If your debts are not “primarily consumer debts” then you may be able to qualify for Chapter 7 bankruptcy much more easily.
As of April 1, 2016 you can have a little more “disposable income” and still pass the “means test” to qualify for Chapter 7 bankruptcy.
Chapter 11 is a powerful way to address a business debt crisis, but because of its detriments must be used extremely selectively.
If you have a business that you need to continue of operate, choosing the right form of bankruptcy involves risks and opportunities.
Chapter 7, sometimes called “straight bankruptcy,” is the simplest type of bankruptcy, yet it can also handle not-so-simple debt problems.
Chapter 13 has a very special way to protect your co-signer, the co-debtor stay. But sometimes the simpler Chapter 7 is more effective.
Skip the “means test” if your debts are not primarily consumer debts.
Careful: if your business is not a sole proprietorship, legal disputes against your business are not “stayed” by your personal bankruptcy’s “automatic stay.”
Ongoing litigation, or the threat of it, against you and/or your business usually dies with your bankruptcy filing.
Chapter 7 can legally write off some business-related taxes, and put you in a good position to take care of the rest.
If your business has failed or is about to, it does NOT likely need a bankruptcy. But YOU personally might.