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"If my business files bankruptcy, do I have to file?"

Question: I had a couple of businesses that didn't work out and I need some questions about going bankrupt answered. I owned an art gallery and a clothing store. The art gallery sold some original art and some prints, lithographs and posters. We had some talented local artists and some work by internationally acclaimed artists. We tried to stock a lot of Atlanta and North Georgia artists, particularly folk artists and pottery. Some of them at exhibits at the High Museum of Art.

The clothing store featured some Atlanta designers from the Art Institute of Atlanta and from the Savannah College of Art and Design and some of the usual high-end brand names. We had better clothes than you can get at Phipps Plaza or Lenox Square. We even tried to sell some of our own tailored suits in off-beat colors and styles. But not enough people wanted the suits.

I need to know if my art gallery can file a chapter 7 bankruptcy without the need for me to file a personal bankruptcy. The gallery has a lot of debt. Most of the debt is in the name of the gallery and I want to open another gallery and art store in Roswell or Sandy Springs. I got some loans and credit cards just in the name of the business. I learned a lot about the art business from that gallery. If I can eliminate the art gallery debt then I can open a new gallery without having to worry about being sued by creditors.

E.C. in Dunwoody

Answer: A business can file a chapter 7 bankruptcy and its owners, officers and partners are not obligated to file a personal bankruptcy. Many businesses use chapter 7 as an option to eliminate debt and there is no personal bankruptcy involved.

However, if there are personal guarantees for the debt, then an owner may also file a personal bankruptcy, usually either a chapter 7 or a chapter 13. It is common for a business and its owner to both file for bankruptcy protection.

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