San Bernardino Small Business Bankruptcy Lawyer
A business owner in San Bernardino County who falls behind usually faces two separate problems at once: the company’s debts and the owner’s own signature on them. Personal guarantees, merchant cash advances, equipment leases, and unpaid vendor accounts tend to land on the person, not just the entity, and the right filing depends on which of those debts is actually driving the pressure. Wadhwani & Shanfeld is a consumer bankruptcy and debt relief law firm that handles Chapter 7, Chapter 13, small business bankruptcy, and business debt solutions for clients across San Bernardino County, Riverside County, Los Angeles County, and Orange County.
If you are searching for a San Bernardino small business bankruptcy lawyer, the first question is rarely “which chapter.” It is “whose debt is this?” A sole proprietor and the business are the same legal person, so every business debt is a personal debt and bankruptcy covers both. An LLC or corporation is a separate entity, and bankruptcy for the owner will not automatically resolve what the company owes, nor will closing the company erase what the owner personally guaranteed. Sorting that out before anything is filed is where a good outcome starts.
How Bankruptcy Works for Owners of Small Businesses
For most small business owners we see, the realistic paths run through consumer bankruptcy chapters rather than a corporate reorganization. A sole proprietor who files Chapter 7 can eliminate qualifying unsecured business debt alongside credit cards and medical bills, subject to the means test. The means test compares household income to the California median for a household of your size and then accounts for actual expenses. Owners whose business debts make up most of what they owe are often evaluated under rules that look different from a typical wage earner’s case, which is one reason the paperwork needs care.
Chapter 13 fits an owner who still has income and wants to keep operating. Debts are reorganized into one monthly payment over three to five years, and creditors are bound by the plan once the court confirms it. It can also deal with priority debts, such as certain tax obligations, that Chapter 7 cannot wipe out, and it gives time to catch up on a mortgage or vehicle loan without losing the property.
Filing also does something a negotiation cannot: the automatic stay takes effect the moment the petition is filed and halts lawsuits, judgments, bank levies, wage garnishments, repossessions, and foreclosure proceedings. For a business owner, that includes collection suits from vendors, lenders, and lessors.
Why Choose Wadhwani & Shanfeld for Small Business Debt Relief
Wadhwani & Shanfeld has helped more than 30,000 individuals and families, along with small business owners, resolve debt through bankruptcy, settlement, and negotiation. The firm is led by two Board-Certified Specialists in Consumer Bankruptcy through the American Board of Certification, founding shareholders Raj Wadhwani and Greg Shanfeld, with more than 90 years of combined legal experience. Board certification is held by a small fraction of attorneys nationally, and it matters when your case involves a mix of personal and business debt that has to be classified correctly.
Raj Wadhwani, a Southwestern Law School graduate, 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, who earned his law degree from the University of Southern California, has handled more than 10,000 bankruptcy cases over three decades. The firm files in every division of the U.S. Bankruptcy Court for the Central District of California, which includes the Riverside Division that serves San Bernardino County.
Clients get direct access to an attorney from the first call, a free consultation, and fast action when a garnishment, foreclosure sale, or repossession is days away. Cases can be handled entirely by phone, email, video, and online chat, and 100% virtual consultations are available, which suits owners who cannot leave a shop or job site in the middle of the day. The firm handles bankruptcy and its alternatives, so the recommendation is based on what fits your numbers, not on the only service on offer.
Business Debt Situations We See in the Inland Empire
- Personal guarantees on business loans: When a lender required your signature on an SBA loan, bank line of credit, or equipment financing, the guarantee makes you personally liable if the company cannot pay. Those guaranteed balances are often unsecured as to you and may be dischargeable in a personal case.
- Merchant cash advances and revenue-based financing: Daily or weekly withdrawals can drain an operating account faster than sales replace it. Lenders in this category sue and sometimes freeze accounts, and the stay from a bankruptcy filing stops that activity.
- Sole proprietor credit card debt: Many owners float payroll, inventory, or fuel on personal cards. Those balances are ordinary unsecured debt and are commonly eliminated in Chapter 7 when the means test is met.
- Vendor and supplier lawsuits: Trucking, logistics, construction, and warehouse-adjacent businesses across the Inland Empire often run on trade credit. A collection suit on an open account carries a four-year limitations period when it rests on a written contract, and a two-year period for an oral one.
- Back taxes and payroll obligations: Income tax debt may be dischargeable if timing rules are met, while many priority tax claims are handled through a Chapter 13 plan. We also represent clients before the IRS to stop levies and set up payment arrangements.
- Commercial lease and equipment deficiencies: When a landlord or lessor takes back space or equipment and then claims a shortfall, that deficiency is a separate debt that can often be discharged.
- Home equity tied to the business: Owners who borrowed against a home to fund the company may be behind on a second mortgage. In some Chapter 13 cases a wholly unsecured second mortgage can be stripped off, and second mortgage settlements are another route.
- Judgments already entered against you: A California money judgment is enforceable for 10 years and can be renewed, which means an old business judgment can keep pursuing wages and bank accounts unless it is addressed.
What to Do in the First Weeks of a Business Debt Crisis
Start by sorting your debts into three piles: debts only the business owes, debts you personally guaranteed, and debts in your own name. That sorting drives everything. Gather your last two years of tax returns, recent profit and loss figures, a list of business and personal accounts, loan and lease agreements, and every summons, demand letter, or levy notice you have received. If a lawsuit has been served, the response deadline is the most important date you have. An expired limitations period is a defense you must raise in a written answer, and a court can still enter judgment if you ignore the case. Collection firms that file suits in Southern California are often counted on to see defaults.
Lawsuits against San Bernardino County residents are typically heard in San Bernardino Superior Court. Civil cases are heard at the San Bernardino Justice Center, and civil matters in the courthouses’ jurisdictions have been moving to the Rancho Cucamonga and Victorville courthouses, so check where your summons directs you. If you live in the Fontana area, there is also a Fontana District of the Superior Court. A bankruptcy case, by contrast, is filed with the U.S. Bankruptcy Court for the Central District of California. The Riverside Division serves both Riverside and San Bernardino Counties, and your street address zip code, not a P.O. box, determines the division.
Avoid a few common mistakes. Do not pay one creditor in full ahead of others right before filing, because trustees can claw back certain transfers. Do not move business assets into a relative’s name. Do not keep paying a merchant cash advance out of personal funds to stay afloat if the numbers no longer work. Do not let a bank account stay under a levy: an automatic deposit account protection applies without any filing, but it does not cover levies for wages owed to others, child or spousal support, or debts owed to the state. And do not wait until a foreclosure sale or repossession is scheduled. A foreclosure sale cannot occur earlier than three months and 20 days after the notice of default is recorded, and a monetary default can be reinstated until five business days before the sale. A repossessed vehicle requires at least 15 days’ written notice before disposal, or 20 days if mailed from or to an address outside California. These windows are real, but they are short.
Protecting Business Property and Personal Assets in a Filing
California does not use the federal exemptions. A filer instead chooses between two state systems, either the standard California exemptions or the alternative system with a flexible wildcard that often works better for renters and owners with little home equity. You must pick one system for the entire case, and you generally must have lived in California for at least 730 days to use them. Under the standard system, the homestead exemption is tied to the countywide median single-family home price within a floor and ceiling that adjust yearly, so a homeowner in San Bernardino County needs a current equity analysis, not a rule of thumb.
For business owners, the exemption for tools of the trade is often the key line. Work vehicles, equipment, and the tools you need to earn a living can be protected, and the dollar amounts differ between the two systems. Inventory, receivables, and business bank accounts are scrutinized more closely, which is why we work through every available exemption before filing. The right choice can mean keeping the truck, the equipment, and the home rather than surrendering them to a trustee.
Small Business Bankruptcy Questions We Hear Most
Can a business owner file personal bankruptcy to deal with business debts?
Yes. If you are a sole proprietor, the business and you are one legal person, so business debts are included. If the company is an LLC or corporation, the entity’s debts remain its own, but debts you personally guaranteed can be addressed in your personal case.
Will I have to close my business if I file Chapter 7?
Not always. A sole proprietor’s business assets become part of the case, but exemptions for tools of the trade and other property often let owners keep operating. Whether the business continues depends on what it owns and whether the trustee has any non-exempt assets to reach.
Does Chapter 13 let me keep running my business?
Generally yes, if you have steady income to fund a plan. Chapter 13 reorganizes your debts into one payment over three to five years and can handle priority debts that Chapter 7 cannot eliminate.
What happens to a debt I personally guaranteed?
The lender can pursue you directly if the business fails. In a personal bankruptcy, a guaranteed unsecured balance is generally treated like any other unsecured debt and can be discharged if it qualifies.
Can bankruptcy stop a lawsuit from a vendor or lender?
Yes. The automatic stay takes effect the moment the petition is filed and halts lawsuits, judgments, bank levies, wage garnishments, and repossessions. We move quickly when a court date or levy is close.
Is there a time limit for a creditor to sue on business debt?
Claims on a written contract carry a four-year limitations period, and oral contracts carry two years. A payment cannot revive a debt that is already time-barred, and only a signed written acknowledgment restarts the clock. The defense must be raised in a written answer.
How long can an old judgment against me or my business stay enforceable?
A California money judgment is enforceable for 10 years from entry and can be renewed. For medical expense judgments and personal debt judgments under certain principal amounts, renewal is now limited to a single five-year extension.
Can a bank freeze my account because of a business judgment?
A creditor with a judgment can levy a bank account. California automatically protects a set amount in a deposit account without any claim of exemption, but the protection does not apply to every kind of levy, and anything above it can be taken. Filing bankruptcy stops the levy.
Can my employer fire me if my wages are garnished over business debt?
California law bars an employer from firing you because your wages are garnished for a single judgment. Ordinary garnishment is capped at the lesser of 20% of disposable earnings or a formula tied to the minimum wage, and you may claim more as exempt if you prove it is needed to support your family.
Is debt settlement a better option than bankruptcy for a small business?
Sometimes. If the debt is manageable and the business is viable, direct negotiation to settle for less than you owe may avoid a filing. If lawsuits, levies, or secured debts are involved, bankruptcy often gives stronger protection. We handle both, so we will tell you which one fits.
Can I file again if I have filed before?
Yes, subject to waiting periods: 8 years between Chapter 7 filings, 4 years to file Chapter 13 after a Chapter 7, 2 years between Chapter 13 filings, and generally 6 years to file Chapter 7 after a Chapter 13, though that last period can be shortened if your plan paid enough to unsecured creditors.
Serving San Bernardino County and the Surrounding Region
Our work for small business owners starts in San Bernardino County and the Inland Empire. We represent clients in the city of San Bernardino itself, and through Fontana, Rancho Cucamonga, Upland, Ontario, Chino, Chino Hills, Montclair, and Claremont. We also serve owners in the eastern San Gabriel Valley communities of Pomona, Glendora, and West Covina, and in neighboring Riverside County, including Riverside and the Coachella Valley.
Many Inland Empire businesses sell, ship, or contract across county lines, so we also represent clients throughout Los Angeles County, including Los Angeles, Long Beach, Torrance, Compton, Inglewood, Sherman Oaks, Van Nuys, and the San Fernando Valley communities of Encino, Woodland Hills, Northridge, Reseda, and North Hollywood. Further north, we serve the Antelope Valley, including Lancaster, Palmdale, and Acton, along with Santa Clarita. In Orange County, we work with owners in Anaheim, Santa Ana, Garden Grove, Fullerton, Huntington Beach, Costa Mesa, Newport Beach, Tustin, Mission Viejo, and Laguna Niguel.
Talk With a San Bernardino Small Business Bankruptcy Attorney
Debts that started with the business rarely stay there, and the sooner an owner sees the whole picture, the more options remain. Call Wadhwani & Shanfeld to speak directly with a small business bankruptcy attorney about your debts, your property, and the filing or non-filing path that protects you best. The consultation is free, and you can handle everything by phone, email, video, or chat.
If a lawsuit, garnishment, levy, or sale date is already on the calendar, call now. We can often act fast enough to put the automatic stay in place before the deadline arrives.
