Type of Business Organization

• If you operate your business as a sole proprietorship, with no independent legal structure, all of your business assets and debts will become a part of the bankruptcy case. If you established an independent legal entity for your business--a limited liability, partnership or corporation, for example--your enterprise is kept separate from the bankruptcy.
  
  

Misconceptions

• Two common misconceptions persist regarding a personal bankruptcy, misplaced beliefs at both ends of the spectrum. Some people incorrectly believe that a personal bankruptcy always affects a small business. Others improperly conclude that such a bankruptcy never affects a small business.
  
  

Significance

• The significance of filing a personal bankruptcy if you established a legal entity for your business is that the assets of your business are fully protected. Those assets cannot be used to satisfy personal debt owed to a creditor.