If I File Personal Bankruptcy, What Information is Needed for My Business?

If you file bankruptcy, either Chapter 7 bankruptcy or Chapter 13 bankruptcy, you must disclose information about any business interest you have now, or have had in the past six years, where your ownership in the business is 5% or more.  This includes disclosing the following information for each business:

Name and address of the business

Federal tax identification number

Beginning date of the business and ending date of the business, if appropriate

Names and addresses of any accountants or bookkeepers

Inventory taken for the business, if appropriate,

Partners, officers, directors and other shareholders as appropriate

Number of shares owned if incorporated or percentage ownership

 

You must also disclose financial information for any business you have had an interest in over the past three calendar years.  This is required for an active, inactive or business closed during that timeframe.  Depending on your interest in the business will impact what information is required.

 

If you have 50% or more ownership interest in the business, the following information is required:

Tax returns for the business, either Form 1120 or Schedule C, for the first two years is sufficient.

An income statement (often known as a profit and loss) and the most recent month’s balance sheet are required for the most current calendar year.

An income statement for each of the six months prior to filing bankruptcy, along with the income statement for the current month, is required.

 

If you have less than 50% interest the business, the following information is required:

Personal tax returns, which are already required, that shows your profit or loss in the business for the first two years.

A statement indicating your portion of the income or loss from the business for the most recent calendar year.  This can be either an income statement for the business or a written statement, on company letterhead, indicating your profit or loss in the business and the most recent month’s balance sheet.

A statement indicating your portion of the income or loss from the business for each of the six months prior to filing bankruptcy.

 

This may seem like a great deal of information, but it is necessary to understand how the business impacts your personal financial situation.  The most recent six months of financial information is used for the means test, if required.  The balance sheet provides the equity in the business. It is extremely important that the equity in the business can be protected before filing bankruptcy.  Your attorney will use this financial information to ensure bankruptcy is the right approach for you.