Self employment and bankruptcy.

December 19th, 2006 by Questions

My partner is self-employed and as such, has a business number (sole-proprietor). He is behind on his taxes and is considering filing for bankruptcy. My question is – if he files for personal bankruptcy, are his business debts included? Are his taxes considered business or personal?

He doesn’t have any but just to make the question robust – would business credit cards also be included?

And lastly – if he declares bankruptcy, can he still own a business? (He’s a carpenter).

Questions

One Response to “Self employment and bankruptcy.”



December 19, 2006 at 10:52 am, Barton Goth, GCO Inc. Bankruptcy Trustees said:

In this situation, because he is operating a sole proprietorship, there is no distinction between him and the company (i.e. the company is not a separate legal entity, but realistically is operating under his own name). As a result, if he files for personal bankruptcy both his personal debts and business debts (including taxes and business credit cards) existing as of the date of filing of theconsumer proposal or a bankruptcy are included.

If you husband wants to continue to be self employed it is possible during either a consumer proposal or a bankruptcy, but it is much easier under a proposal as there are less ramifications on how the business must be operated.

For more information on this you are best to contact a licensed trustee in your area. They will need more details on the type of business and nature of the operations in order to advise you of the specific ramifications of a bankruptcy and remaining self employed.

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