Pittsburgh, PA asked in Bankruptcy and Business Law for Pennsylvania

Q: Should I file bankruptcy?

I started a business with my dad when I was 19 in 2014. Neither of knew absolutely anything about running a business. So we created a partnership through legal zoom (first mistake). We carried on business as usual and messed up filing our taxes so had somebody fix it. Then 2 years later we split ways. It was a clean break and there were no hardships. Anyway I continued to be a terrible business owner until calling it quits this past October. I want to close my business but have many concerns. I was a contractor so I gave out warranties to a lot of my jobs and since I'm not an LLC how do I protect myself. There's that and I'm in at least $40-50 thousand in debt that includes my $36,000 in debt to the irs. I have a family and very little money. I feel I ruined my life in just a few years because of ignorance.

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2 Lawyer Answers
David Luther Woodward
David Luther Woodward
  • Bankruptcy Lawyer
  • Pensacola, FL

A: I am glad you recognize your mistakes, but my advice is to seek out a GOOD BANKRUPTCY LAWYER, not a consumer office that handles consumer bankruptcies on a large scale.

Your local bar association, or the state bar, or both maintain lawyer referral services. You want to seek a business bankruptcy lawyer to advise.

The reason there is no greater detail in this answer is that you have just given the tip of the iceberg in your question. I am sure the devil is in the details.

Good Luck


Daniel Edward Mueller
Daniel Edward Mueller
  • Bankruptcy Lawyer
  • Philadelphia, PA
  • Licensed in Pennsylvania

A: As you are not incorporated, closing the business will not eliminate your personal liability. Although bankruptcy may be the solution, it will take a detailed examination of your overall financial situation to be certain.

That being said, Chapter 7 bankruptcy may help you eliminate most or all of your debt if you qualify. Moreover, it will stop all collections, lawsuits, and harassment.

As to the IRS debt, it may or may not be dischargeable in bankruptcy. Income tax debt is dischargeable if the debt is more than three years old and meets other criteria. Therefore, when you speak to a bankruptcy attorney, make sure the attorney understands the complex area of discharging tax debt. (Unfortunately, not all do.)

If the IRS debt is not dischargeable and you have sufficient income, Chapter 13 may be a better solution. Chapter 13 is a payment arrangement whereby you pay back a portion of your unsecured debts over 36 to 60 months based on your disposable income. Moreover, Chapter 13 can help with tax debt even if the debt is not dischargeable, because tax penalties may be wholly or partially dischargeable. (Often, penalties are the largest portion of the tax debt.)

If bankruptcy is not the right solution, you may have other options, such as debtor defense or debt settlement. Often, you can settle debts substantially below the balance, if you can come up with a lump sum or make a hardship case. (For the tax debt, you may want to speak to a tax attorney or CPA about an offer in compromise or payment arrangement.)

Finally, if your creditors sue you, call a debtor defense attorney right away to avoid a default judgment. Many debt collection lawsuits can be won, particularly if the debts are sold to bad debt buyers.

I'd suggest speaking to a Pennsylvania bankruptcy and debt attorney to review your options.

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