Legal Question in Bankruptcy in Texas

Starting a business during bankruptcy.

Can a person start a business (sole proprietor) with low capital during their bankruptcy(chapter 7 or 13) period if it does not put them into debt?

If so what are the implications? Does it have to be reported? Can your business be taken by the creditors?

In short, is it ok to start and income producing asset during your bankruptcy period--Ch.7 and 13?


Asked on 10/03/01, 6:30 pm

1 Answer from Attorneys
Cole Fulks Cole Fulks, P.C.

Re: Starting a business during bankruptcy.

In a Chapter 7 case, if you start your business after filing, you do not need to include it in your case UNLESS it involves assets of the filed case. The safer practice would be to wait until after your discharge.

In a Chapter 13 case, you would need to amend your schedules to include the enterprise as an expense and as source of income, if you make any money, since this activity probably will affect your ability to repay your creditors under your plan.

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Answered on 11/07/01, 10:46 pm


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