Long Beach Small Business Bankruptcy Lawyer
The goal in a small business debt crisis is rarely just “get out of debt.” It is to stop the bleeding, keep whatever part of the business or your personal finances can be saved, and make sure a company’s problems do not follow you home. Wadhwani & Shanfeld is a consumer bankruptcy and debt relief law firm that handles small business bankruptcy and business debt solutions for owners across Long Beach, Los Angeles County, and the rest of Southern California, and as a Long Beach small business bankruptcy lawyer team, we help owners sort out which of those goals is realistic.
The first question is almost never “which chapter?” It is “who actually owes this money?” A sole proprietor and the business are the same legal person, so every business debt is a personal debt. An owner who signed a personal guaranty on a lease, an equipment loan, or a line of credit is on the hook even if the company is an LLC or corporation. Those guaranties are what drive most small business owners toward a personal filing, and they are the first thing we look for when reviewing your paperwork.
Long Beach owners tend to carry a particular mix of exposure: port-adjacent trucking and logistics companies with equipment financing, restaurants and shops along Second Street and Pine Avenue with commercial leases, contractors and tradespeople with supplier credit, and gig-style service businesses run on personal credit cards. Each of these breaks down differently, and the right answer depends on the structure of the business and what you signed.
Why Choose Wadhwani & Shanfeld for Small Business Debt Problems
Together the team brings more than 90 years of combined legal experience to Chapter 7, Chapter 13, debt settlement, foreclosure defense, wage garnishment, creditor lawsuits, IRS tax debt, and small business bankruptcy and business debt solutions. We serve Long Beach and the surrounding communities of Los Angeles County, along with Orange, Riverside, and San Bernardino Counties, and we handle cases by phone, email, video, and online chat as well as in person.
Raj Wadhwani, a founding shareholder and partner, is a Southwestern Law School graduate who helped pilot the Best Case Bankruptcy software in 1998 and was the first attorney to file a bankruptcy case electronically in the Central District of California. Greg Shanfeld, also a founding shareholder and partner, earned his law degree from the University of Southern California and has handled more than 10,000 bankruptcy cases over three decades. Both hold board certification in consumer bankruptcy, a credential few attorneys in the country carry.
For a business owner, that matters in a practical way. Small business cases sit at the seam between consumer and commercial law, and the mistakes that cost owners the most, like choosing the wrong exemption system or filing in the wrong chapter, are consumer bankruptcy mistakes. You get direct access to an attorney from the first call, a free consultation, and 100% virtual consultations if you cannot step away from the shop. When a garnishment, foreclosure sale, or repossession is days away, we move fast. The firm files in every division of the U.S. Bankruptcy Court for the Central District of California.
Business Debt Situations We See Most Often
- Personally Guaranteed Business Loans: Bank loans, SBA-backed financing, and equipment leases usually require a personal guaranty. When the business cannot pay, the lender pursues you directly, and a Chapter 7 or Chapter 13 can address that guaranty even if the company itself is closing.
- Sole Proprietor Debt: With no legal separation between you and the business, vendor balances, merchant cash advances, and card debt all land in one personal case. Chapter 7 can discharge qualifying unsecured business debt alongside household debt.
- Commercial Lease Obligations: A landlord’s claim for unpaid rent or the balance of a lease term can be substantial. Whether it is dischargeable, and whether you signed personally, shapes the entire strategy.
- Creditor Lawsuits Against the Owner: Suppliers and lenders often sue the owner as well as the company. Filing bankruptcy halts those suits through the automatic stay, including bank levies and judgments that have not yet been collected.
- Trade and Equipment Financing: Trucks, kitchen equipment, and machinery are secured debts. Chapter 13 can let you keep equipment you need and catch up on payments over time, while Chapter 7 may mean surrendering it.
- Payroll and Business Tax Debt: IRS balances tied to the business need separate analysis. Some older income tax debt can be eliminated if timing rules are met, and in other cases a payment arrangement or levy stop is the better path.
- Business Credit Cards and Merchant Advances: Owners often finance slow months on personal cards. These unsecured balances are typically the easiest to discharge, and they are often the bulk of what a struggling owner owes.
- Wind-Down of a Closing Business: Sometimes the right move is closing cleanly and resolving the personal fallout, rather than propping up a company that cannot recover.
Decisions to Make Before You File Anything
The order in which you act matters more than most owners realize. Start by pulling every document that carries your signature: loan agreements, guaranties, leases, equipment contracts, and credit applications. The signature, not the company name on the letterhead, decides whether a debt is yours personally.
Next, decide whether the business continues. If it is still operating and has real income, Chapter 13 may let you keep it running while reorganizing personal debts into one plan over three to five years. If it has already stopped earning, Chapter 7 may wipe out the qualifying debt faster. Which one is open to you depends partly on the means test, which compares household income to the California median for your household size.
Third, pause before paying selected creditors. Paying a friendly vendor, a family member, or a lender you personally guaranteed right before filing can look like a preferential payment that a trustee may try to claw back. Do not move money or transfer business assets to relatives without talking to an attorney first.
If you have already been sued, watch the response deadline. Ignoring a summons can lead to a default judgment, and an expired limitations period is a defense you generally must raise in a written answer, or the court can still enter judgment. Debt on a written contract generally carries a four-year window to sue, and oral contract debt two years, though a payment will not revive a debt that is already time-barred. Los Angeles County Superior Court hears many of these suits, and the Long Beach area falls within its South District. Your bankruptcy case, though, would be filed in the U.S. Bankruptcy Court for the Central District of California, and the division depends on your street address zip code rather than where the business operates.
If a levy or garnishment is already in motion, know that filing a Chapter 7 or Chapter 13 case stops most of them the moment the petition is filed. Even without bankruptcy, a bank levy cannot take the first slice of your deposit account balance, which the bank must shield automatically without a claim of exemption, though that protection does not cover levies for wages owed to another, support, or state debts. If you are facing foreclosure on a property tied to the business, a sale cannot be set until roughly three months and 20 days after the notice of default is recorded, and a monetary default can be cured until five business days before the sale. If a vehicle is repossessed, the lender generally must give at least 15 days’ written notice before disposing of it.
What Stays With You: Exemptions for Business Owners
Owners worry most about losing the tools of the trade and the home. California does not use the federal bankruptcy exemptions. Instead, you choose one of two state systems for the whole case: the traditional system with a homestead exemption based on county median home prices (within a floor and ceiling that adjust annually), or the alternative system with a flexible wildcard that often suits renters better. You cannot mix and match, and you generally must have lived in California for at least 730 days to use the state exemptions.
For a business owner, the choice often turns on what you own. Tools of the trade are protected in both systems, but the amounts differ, as do the rules for vehicles and equity. Choosing the system that protects your actual assets is one of the most consequential decisions in the case, and it is one our board-certified attorneys make carefully for every client. Most of our clients keep everything they own.
Long Beach Small Business Bankruptcy Questions Answered
Can I file bankruptcy if my business is an LLC or corporation?
The entity and you are separate. The company itself may be wound down or filed on separately, but your personal exposure, especially from guaranties, can be addressed in a personal Chapter 7 or Chapter 13. We review how the business is structured first.
Do I have to close my business to file?
No. A Chapter 13 case is designed for people with steady income who want to keep operating. Whether a Chapter 7 is workable while the business keeps running depends on the assets involved and the means test.
Will I lose my business equipment?
Often not. California’s exemption laws protect tools of the trade up to set limits, and the system you choose affects how much. Financed equipment is a secured debt that we handle separately, with options to keep it in Chapter 13.
What happens to a personal guaranty on a lease or loan?
A guaranty is a personal debt, and a lender can generally pursue you for it. Filing bankruptcy can discharge or restructure it, subject to the specific type of obligation and the chapter you choose.
Can bankruptcy stop a creditor lawsuit against me and my company?
The automatic stay halts suits against you personally the moment you file. It does not automatically protect a separate corporate entity, which is why we look at both sides before filing.
Are business tax debts wiped out?
Some older income tax debt can be eliminated if it meets timing rules, but many tax debts cannot. We evaluate each year’s balance and, where bankruptcy is not the right tool, represent clients with the IRS to stop levies and set up payment arrangements.
Can a creditor take money from my business bank account?
A judgment creditor can levy a deposit account, though a portion is protected automatically. Because that protection is limited per debtor and does not cover every kind of levy, a mixed personal-business account can be more exposed than owners expect.
What about wage garnishment if I also have a day job?
On an ordinary judgment, garnishment is capped at the lesser of 20% of weekly disposable earnings or 40% of the amount those earnings exceed 48 times the minimum hourly wage. You can also claim an exemption for earnings needed to support your family, and an employer cannot fire you because of a garnishment for a single judgment.
Is a judgment against my business going to haunt me for years?
A California money judgment is enforceable for 10 years from entry and can be renewed, though newer limits restrict renewal of certain personal debt and medical judgments to one five-year extension. Bankruptcy can often address judgments and liens, and we review what can be removed.
Is it worth hiring a lawyer instead of using a petition preparer?
A petition preparer can type forms but cannot give legal advice, pick exemptions, or represent you if a trustee or creditor objects. In a case involving business assets and guaranties, mistakes can cost you property or your discharge.
Do I have to come into an office?
No. We handle cases fully by phone, email, video, and online chat, and offer 100% virtual consultations, which many owners find easier than leaving a business unattended.
Serving Long Beach Small Business Owners and Surrounding Communities
Our work for Long Beach owners extends from the downtown and waterfront districts through Belmont Shore, Naples, Bixby Knolls, and the neighborhoods north toward Signal Hill. We also help owners in Lakewood, Paramount, Bellflower, Norwalk, Cerritos, Gardena, Torrance, Compton, and Huntington Park, along with business owners throughout the rest of Los Angeles County, including Inglewood, Santa Monica, Hollywood, and the San Fernando Valley communities of Van Nuys, Encino, Woodland Hills, Northridge, and Sherman Oaks.
Beyond the county line, we represent small business owners across Orange County in Cypress, Garden Grove, Anaheim, Santa Ana, Fullerton, Buena Park, Huntington Beach, Costa Mesa, Newport Beach, and Tustin, as well as Riverside County and San Bernardino County, including Ontario, Rancho Cucamonga, Upland, Fontana, Pomona, and the Inland Empire. Antelope Valley owners in Lancaster, Palmdale, and Acton can also reach us. Whether your business is a trucking operation near the port or a storefront in the Valley, the same attorneys review your case.
Talk With a Long Beach Small Business Bankruptcy Attorney
You do not have to keep guessing which debts are yours and which are the company’s. Call Wadhwani & Shanfeld for a free consultation with a Long Beach small business bankruptcy attorney who can review your guaranties, leases, and creditor demands and tell you honestly whether bankruptcy, settlement, or a different route fits best. Speak directly with an attorney from your first call, and handle everything remotely if that works better for your schedule.
