Small Business Bankruptcy in Pennsylvania

It can file, but a business entity does not receive a discharge under 11 U.S.C. § 727(a)(1). A Chapter 7 for an entity is really a court-supervised liquidation. In most small-business cases we instead wind the business down under Pennsylvania law and file personally to discharge the guaranties that would otherwise follow you.

Subchapter V is a streamlined small-business Chapter 11 that lets the owner keep the company while paying projected disposable income into a 3–5 year plan. It requires that at least half your debt come from business activity and that your total debt fall under the statutory cap, which Congress has adjusted several times — we check the current figure against your balance sheet before recommending it.

No. A personal guaranty is a separate contract between you and the creditor, so dissolving the LLC leaves the guaranty fully enforceable against you. Discharging that liability generally requires a personal bankruptcy filing, which is why we review every lease, note, and credit application before choosing a chapter.

In Subchapter V, yes — you remain in possession and keep running the business. In a personal Chapter 13, a sole proprietorship generally keeps operating as well, with the business income and expenses reported to the trustee. A personal Chapter 7 is more fact-specific; if the business has real assets or goodwill, we plan around that before filing.

The withheld employee portion is a trust-fund tax and is not dischargeable for a responsible person under 26 U.S.C. § 6672. It can, however, be paid in full as a priority claim through a Chapter 13 or Subchapter V plan without additional penalties accruing, which is usually far better than negotiating with the IRS or the PA Department of Revenue on your own.

Often not. The federal exemptions we can elect in Pennsylvania include a tools-of-the-trade exemption plus a wildcard that can be stacked on top of it. For higher-value equipment, Chapter 13 or Subchapter V lets you keep everything and pay the non-exempt value over the plan instead of surrendering it.

We charge a flat attorney fee that is fully disclosed and agreed to before you engage the firm. Court filing fees and the two required credit-counseling courses are separate. Many clients pay the attorney fee in installments before filing.

Chapter 7 stays on your credit report for up to 10 years; Chapter 13 for up to 7 years. In practice most clients see their FICO score improve within 12–24 months because their debt-to-income ratio drops dramatically and they can demonstrate on-time payments on new credit.