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Ellen
Ellen, Attorney
Category: Business Law
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Experience:  25 years of experience helping people like you.
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If my son files a chapter 7 bankruptcy for his personal &

Resolved Question:

If my son files a chapter 7 bankruptcy for his personal & his S corp (physical therapy clinic) can he start a sole proprietorship in another town in the same profession after bankruptcy since it's their livelihood. Also, does the S corp assets get liquidated for tax purposes in the same manner if he files chapter 7 or are there other tax implications with the chapter 7 vs. normal liquidation.
Submitted: 8 years ago.
Category: Business Law
Expert:  Ellen replied 8 years ago.
The purpose of a Ch 7 bankruptcy is to discharge or wipe out the debts of a debtor in order to allow the debtor a fresh start financially.

An individual who has had his debts discharged in a Ch 7 can certainly open a new business regardless of the form of the entity, ie, a sole proprietorship, corporation, etc. The debtor does not need to relocate although he is free to do so.

It is important to note that the debtor cannot take or transfer any assets from either his personal or corporate bankruptcy estate unless they have been "abandoned" by the bankruptcy trustee.

I am not aware of any tax implications, however, that question would be better addressed to a CPA or tax adviser.

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