Many Iowa bankruptcy clients own and operate small businesses in Iowa. Congress anticipated this when drafting the bankruptcy law and provided for specific business needs in order to encourage you to continue operating if you desire. Of course, many clients simply stop operating their Iowa business when they file bankruptcy and “walk away” from all the related debt.
If you plan to continue operating it is important to objectively evaluate your income, expenses and profit. Many small businesses are propping their company up with credit cards or personal loans. If you file Iowa bankruptcy and try to continue such a business you could lose your opportunity for a fresh start and end up in much worse shape financially.
Business Equipment Exemption: Your business assets are exempt up to $10,000. Hence, if you have $20,000 in business equipment, and owe $10,000 in loans secured by that equipment, then you would likely keep all your equipment since the estate could not reach more than $10,000 in equipment given the lien. See Iowa Bankruptcy Exemptions.
Inventory is Not Exempt: Hence, it is best to minimize inventory prior to filing your case.
Accounts Receivable are Not Exempt: If you are owed money in your business, you should collect it prior to filing bankruptcy.
Incorporated Businesses: Are not a problem unless there are significant unsecured or under-secured assets. If you have a closely held corporation with significant equity in assets, your interest in the corporation is not exempt and you should carefully discuss this with counsel prior to filing bankruptcy.
Risk of Fraud: Fraud issues seem to arise more often with business cases, typically where there is a claim that your business accepted payment for work that was not performed. Fraud is an exception to discharge. If this is a possibility for your case you should discuss it with counsel prior to filing.
For more information on keeping your property when filing Iowa Bankruptcy, see- Will I lose property?
