Chapter 7 Bankruptcy
Chapter 7 bankruptcy is the most common type of bankruptcy for both individuals and businesses. It is designed to give you a relatively clean slate when you find yourself in enough debt that you can’t get past it on your own. Chapter 7 of Title 11 of the Bankruptcy Code governs the liquidation process under the bankruptcy laws in the United States, as opposed to Chapters 11 and 13 that govern the reorganization of debt. With a Chapter 7 bankruptcy, your eligible assets will be seized and liquidated. The proceeds of the liquidation go towards repaying your debts.
Deciding to file for bankruptcy should be an informed, well-thought out decision. Given the multiple types of bankruptcy one can file, it’s important to research each option and figure out which one most benefits you. Our Clermont Chapter 7 Bankruptcy Attorneys at the BCN Law Firm are knowledgeable in the process of filing for bankruptcy and would like to help you make the best decisions.
Chapter 7 Bankruptcy for Individuals
People that live, work, or own property in the US may be eligible for a Chapter 7. As with all types of bankruptcy, you must not have had a case dismissed within the last 180 days. A Chapter 7 stays on your credit report for ten years, unlike a Chapter 13 that stays for only seven years. This will most likely have a negative impact on your ability to receive credit, though chances are the circumstances that brought you to bankruptcy will have already negatively impacted this. Obtaining credit during and after bankruptcy is a complicated subject, however. Your ability to get it is based on several factors that are hard to predict.
Chapter 7 Bankruptcy for Businesses
When a business is in deep debt and is unable to pay its creditors, it might be eligible to file a Chapter 7 bankruptcy. When a Chapter 7 is filed for a business, operations cease unless a Chapter 7 Trustee continues them. A Trustee is appointed as soon as the business files and will usually sell all the eligible assets to generate money to distribute to creditors. Employees may or may not lose their jobs. Sometimes, when larger companies enter a Chapter 7 bankruptcy, whole branches of the business will be sold off intact, meaning those employees will keep their current job with a different employer.
Bankruptcy does not dissolve debts owed to fully secured creditors, for example mortgage lenders or collateralized bondholders. A creditor is considered fully secured when the value of their collateral for the loan equals or surpasses the amount of debt. Because of this, fully secured creditors cannot participate in the distribution of funds from liquidated assets.
Discharging of debts with a Chapter 7 Bankruptcy only occurs with individuals, not businesses. Businesses that file a Chapter 7 are dissolved, the money acquired is distributed to lenders, and the debts continue to exist until the proper statute of limitations has been reached.
Get the Help You Need
If you are an individual or business looking into filing for bankruptcy, we urge you to go into the process well-informed and adequately represented. Our Chapter 7 Bankruptcy lawyers in Clermont know how confusing this process is. We’ve been successfully advocating for bankruptcy clients for years. Let us at BCN Law Firm help you determine what your options are and which fits your situation best.
Give us a call at (855) LAW-2020 or fill out our contact form online to set up a free consultation*.