Van Nuys Small Business Bankruptcy Lawyer
Van Nuys business owners get to a point where the receipts stop covering the payroll, the supplier balance, the lease, and the loan you personally guaranteed. What you decide next determines whether you keep your home, your equipment, and your ability to start again. Wadhwani & Shanfeld is a consumer bankruptcy and debt relief law firm that handles Van Nuys small business bankruptcy lawyer matters, along with Chapter 7, Chapter 13, debt settlement, and creditor defense, for owners across Van Nuys, the San Fernando Valley, and Los Angeles County.
For a lot of small operators, the business and the owner are financially the same person. A sole proprietorship has no legal wall between business debts and personal assets. A corporation or LLC has one on paper, but personal guarantees on credit lines, equipment leases, and commercial leases tear it down. That is why the first question is rarely “should the company file?” It is “whose name is on the debt, and what can a creditor actually reach?”
Why Choose Wadhwani & Shanfeld for Small Business Debt Problems
Raj Wadhwani and Greg Shanfeld are the founding shareholders and partners, and together with their team they bring more than 90 years of combined legal experience to cases that often start with a business and end up in the owner’s personal finances. The firm serves clients throughout Los Angeles, Orange, Riverside, and San Bernardino Counties and files in every division of the U.S. Bankruptcy Court for the Central District of California.
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 earned his law degree from the University of Southern California and has handled more than 10,000 bankruptcy cases over three decades. For a business owner, that depth matters in practical ways: exemption choices, trustee questions about business assets, and personal guarantee exposure all get decided by people who have seen them thousands of times.
You speak with an attorney from your first call, not an intake script. When a garnishment, levy, repossession, or foreclosure sale is days away, the firm moves fast. Consultations are free, and the entire case can be handled by phone, email, video, or online chat if you cannot leave the shop during the day.
Business Debt Situations That Lead Van Nuys Owners to File
- Personal Guarantees on Business Loans: A lender who got your signature on a line of credit or SBA-backed loan can pursue you individually when the business cannot pay. Chapter 7 can discharge many of these guaranteed debts, and Chapter 13 can restructure them if you have steady income.
- Sole Proprietor and Self-Employed Filers: Contractors, rideshare drivers, salon owners, and freelancers carry business debt in their own names. Their cases turn on how business income is documented for the means test and what tools of the trade can be protected.
- Merchant Cash Advances and Online Lenders: Daily or weekly debits drain operating cash quickly. When these were personally guaranteed, they are often dischargeable unsecured debt, though each agreement needs a close read.
- Commercial Lease Defaults: A landlord’s claim for unpaid rent and remaining lease term can follow a guarantor home. We look at what is actually owed and whether the claim can be eliminated or negotiated.
- Creditor Lawsuits and Judgments: Suppliers, lenders, and collection firms sue in Los Angeles Superior Court, and the Van Nuys courthouse is one of the locations in that system. A judgment can lead to bank levies and wage garnishment, both of which the bankruptcy automatic stay halts.
- Unpaid Business Taxes and IRS Debt: Some older income tax debt can be discharged if timing rules are met, while recent and trust-fund taxes generally cannot. We sort which category you are in before recommending a path.
- Vehicles and Equipment Under Finance: Work trucks, vans, and equipment bought on credit can be repossessed fast. Chapter 13 can let you keep them while you catch up.
- Closing a Failed Business Cleanly: Sometimes the right move is to wind the business down and file personally, so lingering obligations do not follow you into whatever comes next.
What to Do Right Now if Your Business Debt Is Out of Control
Start by sorting your debts into two piles: what you owe personally, and what only the business owes. Pull every loan agreement, lease, and credit application and look for the word “guarantor” or your signature on a personal line. That one distinction often determines whether a bankruptcy filing by you, by the entity, or by neither is the sensible move.
Do not ignore a lawsuit. A creditor who sues on a written contract generally has four years to do it, and two years on an oral contract. An expired deadline is a defense, but you have to raise it in a written response; if you stay silent, the court can still enter judgment against you. Also know that a payment on an old, time-barred debt does not bring it back to life, and only a signed written acknowledgment can restart the clock. If you have been served, call before your response deadline passes.
Stop moving money around. Paying one friendly creditor or a relative ahead of the rest, or shifting business assets into another name, can be unwound by a bankruptcy trustee and can cause serious problems in your case. Likewise, do not drain retirement accounts to feed a failing business. Those accounts are often protected in bankruptcy and are hard to rebuild once spent.
Where you file depends on your home address. The U.S. Bankruptcy Court for the Central District of California assigns cases by the debtor’s street address zip code, and Van Nuys falls within the San Fernando Valley Division, which sits in Woodland Hills. Other Valley communities such as Sherman Oaks, Encino, Reseda, and Northridge are in the same division. If you live elsewhere in Los Angeles County, you may land in the Los Angeles Division instead, so the zip code gets confirmed before anything is filed.
Gather the last two years of business and personal tax returns, recent bank statements, profit and loss figures, a list of business assets and equipment, and every creditor letter or court paper you have received. The more complete the picture, the faster an attorney can tell you whether Chapter 7, Chapter 13, or a settlement outside court fits.
Which Chapter Fits a Small Business Owner
Chapter 7 wipes out qualifying unsecured debt, including credit cards, medical bills, personal loans, and many guaranteed business debts. It requires passing the means test, which compares household income to the California median for your household size. Owners whose business has already closed often pass easily because the income is gone, though the test looks back at a prior period, which is why documentation matters. Most Chapter 7 cases finish in roughly four months.
Chapter 13 suits owners who still have steady income and want to keep property. Debts are folded into one monthly payment over three to five years, and creditors are bound once the court confirms the plan. It can also address back taxes that Chapter 7 cannot touch, cure arrears on a mortgage or vehicle loan, and handle income above the Chapter 7 limit. Debt settlement is the third route, where we negotiate directly with a lender to resolve what you owe for less, and it can make sense when the total debt is manageable and you want to avoid court altogether.
If the business itself is an entity with its own debts, filing for the company is a different analysis from filing for you personally, and the right choice depends on the guarantees, the assets, and your plans after the dust settles. We lay that out candidly, including when bankruptcy is not the answer.
Keeping Your Home, Vehicle, and Business Tools
California does not use the federal exemptions. A filer chooses one of two state systems for the whole case: the standard system, which includes a homestead exemption that is tied to county home prices and adjusted for inflation, or an alternative system with a flexible wildcard that often works better for renters and people with little home equity. You generally must have lived in California for at least 730 days to use the state exemptions. Both systems protect tools of the trade, which matters if your livelihood depends on a truck, equipment, or instruments. Picking the wrong system can cost you property, so we run the numbers both ways before filing.
Foreclosure timing is also on the clock. After a notice of default is recorded, a sale date can be set no earlier than three months and 20 days later, and you can reinstate a monetary default until five business days before the sale. Filing bankruptcy halts the sale the moment the petition is filed. For vehicles, a lender must give at least 15 days’ written notice before disposing of a repossessed car, and that notice must be given within 60 days of repossession for the lender to pursue a deficiency.
Garnishment and bank levies get stopped by the automatic stay too. On an ordinary judgment, wage garnishment is capped by a formula tied to disposable earnings and the minimum wage, and California automatically shields a set amount in a bank account from levy without any claim being filed, though that protection does not cover every kind of debt.
Van Nuys Small Business Bankruptcy Questions Answered
Can a Van Nuys small business owner file bankruptcy for the business and for personal debt?
Yes, but they are separate decisions. A sole proprietor files one personal case that covers everything. If you operate through a corporation or LLC, the entity and you are separate legal persons, and the right move depends on guarantees, assets, and whether the entity will keep operating.
Will I lose my business if I file Chapter 7?
Not necessarily. If you are a sole proprietor, business assets are part of your case and a trustee reviews them, though exemptions such as tools of the trade protect a lot. Whether a business can continue depends on its assets and structure, and we discuss that before you file.
Are personal guarantees on business loans dischargeable?
Often yes. A guaranteed business debt is a personal unsecured obligation, and Chapter 7 can eliminate it. Exceptions exist for debts incurred through fraud, and some tax debts and secured obligations are treated differently.
Does the automatic stay stop a creditor lawsuit against my business?
It stops lawsuits against you personally the moment you file. A separate corporate or LLC defendant is not protected by your personal filing, which is one reason the structure of your business matters so much.
Can I stop a wage garnishment or bank levy by filing?
Yes. Filing Chapter 7 or Chapter 13 halts most garnishments and levies when the case is filed. We can often prepare an emergency filing quickly if a levy or sale is close.
What business debts cannot be eliminated?
Most recent income taxes, payroll trust-fund taxes, child support, alimony, most student loans, and debts from fraud generally survive. Some older income tax debt can be discharged if it meets specific timing rules.
How long can a creditor collect on a judgment against me?
A California money judgment is enforceable for 10 years and can be renewed. Recent law limits renewal to a single five-year extension for certain smaller personal debt and medical judgments.
Can a collector keep calling me about business debt?
California’s Rosenthal Act covers original creditors as well as third-party collectors, and a consumer can recover damages and attorney fees for violations. It applies to consumer-type debt, so its reach for purely commercial debt is more limited and worth reviewing with an attorney.
Is it worth hiring a lawyer instead of using a document preparer?
A bankruptcy petition preparer can type your forms but cannot give legal advice, choose exemptions, or represent you if a trustee or creditor objects. Business-related cases raise exactly those issues, and mistakes can cost you property or your discharge.
Do I have to come into an office to start?
No. We offer 100% virtual consultations and can handle your whole case by phone, email, video, or online chat, which suits owners who cannot step away from the business.
How soon can I rebuild credit after a filing?
Many clients see scores begin recovering within the first year by using a secured card responsibly and paying every bill on time. Chapter 7 can remain on a report for up to 10 years and Chapter 13 typically comes off after 7, though the effect fades well before then.
Serving Small Business Owners From Van Nuys Across Southern California
We start close to home with Van Nuys and the surrounding San Fernando Valley, including Sherman Oaks, Encino, Woodland Hills, Reseda, Northridge, Granada Hills, North Hills, Mission Hills, North Hollywood, San Fernando, and Sylmar, and reach into Hollywood, Santa Monica, and the Westside. Across Los Angeles County we also work with owners in Los Angeles, Santa Clarita, Long Beach, Lakewood, Torrance, Compton, Inglewood, Lancaster, Palmdale, Acton, and the Antelope Valley.
Beyond Los Angeles County, we represent clients in the Inland Empire and eastern San Gabriel Valley, including Ontario, Rancho Cucamonga, Upland, Fontana, San Bernardino, Riverside, Pomona, Chino, Chino Hills, Montclair, Claremont, Glendora, West Covina, and the Coachella Valley. In Orange County we serve Anaheim, Santa Ana, Garden Grove, Buena Park, Fullerton, Huntington Beach, Westminster, Costa Mesa, Newport Beach, Tustin, La Habra, Placentia, Mission Viejo, and Laguna Niguel, plus Norwalk, Bellflower, Paramount, Gardena, Cerritos, Cypress, Signal Hill, and Huntington Park.
Talk With a Van Nuys Small Business Bankruptcy Attorney Today
You do not have to keep absorbing calls, demand letters, and lawsuits while you guess at your options. A Van Nuys small business bankruptcy attorney at Wadhwani & Shanfeld can review your guarantees, income, property, and debts, tell you honestly whether Chapter 7, Chapter 13, settlement, or something else fits, and move quickly if a sale or levy date is close.
Call for a free consultation and speak directly with an attorney, or schedule a virtual meeting that fits around your business hours.
